Good Life Corporation v. Hazeldean Properties Inc., 2008 ONCA 742
CITATION: Good Life Corporation v. Hazeldean Properties Inc., 2008 ONCA 742
DATE: 20081030
DOCKET: C48206 & C48231
COURT OF APPEAL FOR ONTARIO
Weiler, Simmons and Rouleau JJ.A.
BETWEEN
Good Life Corporation
Applicant (Appellant)
and
Hazeldean Properties Inc., Royal LePage Team Realty Ltd., and Bank of Nova Scotia
Respondents (Respondent)
BETWEEN
1496261 Ontario Inc., o/a Rockin’ Johnny’s Diner and Royal LePage Team Realty Ltd.
Applicants (Appellant)
and
Good Life Corporation and Hazeldean Properties Inc.
Respondents (Respondents)
David A. Broad and Rasha M. El-Tawil, for Good Life Corporation
David Debenham, for Royal LePage Team Realty Ltd.
Sandra McNeely and Yousef Jabbour, for Hazeldean Properties Inc.
Heard: September 2, 2008
On appeal from the judgment of Justice E.R. Browne of the Superior Court of Justice dated December 17, 2007 and reported at 63 R.P.R. (4th) 267.
Rouleau J.A.:
[1] These two appeals deal with parking covenants contained in two leases entered into by the landlord, Hazeldean Properties Inc. (Hazeldean). The first lease, with Royal LePage Team Realty Ltd. (Royal LePage), guarantees that at least 30 parking spaces will be available to Royal LePage’s clients and staff, of which six spaces are to be marked as reserved exclusively for Royal LePage. The second lease, with Good Life Corporation (Good Life), provides for unlimited access to parking for Good Life clients and staff, and imposes constraints on Hazeldean’s ability to “reduce the available spaces for Tenant parking available at the commencement of the Lease”.
[2] Good Life appeals from the dismissal of its application for an injunction restraining Hazeldean from permitting the reservation of parking spaces for the exclusive use of other tenants and for a declaration that Hazeldean is currently in violation of the parking covenant contained in the Good Life lease because it has given exclusive parking spaces to two tenants, Royal LePage and the Bank of Nova Scotia. Royal LePage appeals from the dismissal of its application for a declaration that it is entitled to 30 spaces reserved exclusively for its clients and staff or, in the alternative, for a declaration that it is entitled to 6 reserved spaces.
FACTS
[3] Hazeldean is the landlord and owner of a shopping plaza located in Kanata, a part of the City of Ottawa (the Municipality). Good Life, a fitness club operator, and Royal LePage, a real estate agency, are two of Hazeldean’s tenants in the shopping plaza. Both Royal LePage and Good Life require adequate and convenient access to parking for their clients and staff. Given its significance to tenants’ business, access to parking is an important issue in the negotiation of lease agreements.
[4] In 2002, Hazeldean was in the midst of planning the development of the shopping plaza. At this time, the original site plan provided for 292 parking spaces. When the final version of the site plan was approved by the Municipality in October 2003, it provided for only 275 parking spaces, a reduction of 17 spaces from the original plan.
[5] Commencing in the summer of 2002, Hazeldean negotiated leases with prospective tenants. Some of these leases, including the leases with Good Life, Royal LePage, and the Bank of Nova Scotia, contained parking covenants.
[6] The parking covenants in the Bank of Nova Scotia and Royal LePage leases guarantee each tenant a specified number of parking spaces, of which a certain number are to be marked as reserved exclusively for that tenant’s clients and staff. The parking provision at issue in the Royal LePage lease reads as follows:
The Landlord shall guarantee to provide the Tenant with a minimum of 30 parking spaces for use by the Tenant’s employees, servants, agents and customers. The Landlord may not impose charges for the use of parking spaces. Said spaces shall be located on the upper level of the Lands and side of the Lands and 6 of the guaranteed 30 spaces shall be located as indicated in the Schedule 1 and marked reserved for Royal LePage customers or staff. The guaranteed minimum of 30 parking spaces shall be available to the Tenant 24 hours a day, 7 days a week.
[7] The provision in the Good Life lease, however, does not grant Good Life the right to parking spaces reserved exclusively for Good Life clients and staff. Instead, it provides that Good Life will have unlimited access to parking at the property, and restricts Hazeldean’s ability to reduce the number of parking spaces from the number that was available to Good Life at the commencement of the lease. The parking provision in the Good Life lease reads as follows:
The Tenant shall have unlimited access to parking at the property for its members and staff at no cost. The Landlord shall not reduce the available spaces for Tenant parking available at the commencement of the Lease, during the Term of the Lease or any extension thereof. However, the prohibition against reduction of available spaces shall be subject to requirements by municipal authorities or governmental authorities respecting expropriation.
[8] While parking in the plaza generally complies with the Municipality’s By-Laws, several tenants have received complaints from both clients and staff regarding the inadequacy of the parking arrangements. These complaints, and the resulting tension, were the impetus for the applications brought by both Good Life and Royal LePage.
[9] In the proceedings before the application judge, Good Life took the position that it was entitled to non-exclusive parking rights for the entire parking lot and that by granting Royal LePage and the Bank of Nova Scotia reserved spaces, Hazeldean breached the parking covenant in the Good Life lease. Royal LePage argued that it was entitled to 30 exclusive parking spaces and to the extent that these spaces were not available to Royal LePage at all times, Hazeldean was in breach of the parking covenant in the Royal LePage lease.
[10] The application judge dismissed Good Life’s application. He found that the term “access” in the Good Life lease was ambiguous, and interpreted it to mean access to the parking lot generally, as opposed to access specifically to individual parking spaces. The application judge further found that the words “commencement of the lease” referred to in the parking covenant had the same meaning as the expression “Commencement Date”, which is a defined term in the Good Life lease and, on the facts, works out to be November 14, 2004.
[11] From November 14, 2004, to the date of the application, the number of parking spaces at the shopping plaza remained constant at 275, the number provided for in the final site plan approved by the Municipality in October 2003. In the application judge’s view, the fact that Hazeldean may choose to grant to some of the tenants the exclusive right to use a specific number of these spaces does not “reduce the available spaces for [Good Life] parking” contrary to the parking covenant in the Good Life lease. There was, therefore, no basis for finding that Hazeldean breached the parking covenant in the Good Life lease, nor was there a basis for enjoining Hazeldean from later granting to a tenant the exclusive use of any or all of the parking spaces.
[12] The application judge also dismissed Royal LePage’s application. The reasons do not expressly address the basis for this dismissal.
ANALYSIS
Good Life’s Parking Covenant
[13] On appeal, Good Life argues that the application judge erred in his interpretation of the parking covenant. Good Life submits that, properly interpreted, and viewed in the context of the entire lease, the first sentence of that covenant, “[t]he Tenant shall have unlimited access to parking at the property for its members and staff at no cost”, makes it clear that Good Life has unlimited access to the all of the parking spaces at the shopping plaza. Restricting Good Life’s access to some spaces by granting other tenants the exclusive use of a certain number of parking spaces therefore contravenes the terms of the Good Life lease. Good Life further submits that the second sentence, “[t]he Landlord shall not reduce the available spaces for Tenant parking available at the commencement of the Lease, during the Term of the Lease or any extension thereof”, restricts Hazeldean’s ability to reduce the number of spaces in the parking area from the 275 spaces that were originally constructed.
[14] I do not agree with Good Life’s interpretation of the parking covenant. In my view, the meaning of the term “access” in the first sentence of the parking covenant is clear and unambiguous, and I agree with the application judge’s interpretation of the term, namely, that it refers to access generally to “parking”. The second sentence, however, refers specifically to the availability of “spaces” for parking. Read in context, therefore, the first sentence addresses the issue of access to the parking area generally, and makes it clear that Hazeldean cannot impose restrictions on Good Life’s access to the parking area, for example, by setting limited hours of operation or charging a fee for parking. The second sentence, on the other hand, deals specifically with the availability of parking spaces and makes it clear that Hazeldean cannot reduce the number of spaces that were available for Good Life’s use at the “commencement of the Lease”.
[15] If Good Life wanted to ensure access, specifically, to all of the individual parking spaces in the parking area, as opposed to the parking lot generally, it was incumbent on Good Life to specify accordingly in the lease. Similarly, if Good Life wished to prevent the landlord from granting reserved spaces anywhere in the parking lot to other tenants, it should have negotiated for the inclusion of such a clause in the lease.
[16] Good Life also argues that if the first sentence of the parking covenant simply ensures access to the parking lot generally, this sentence becomes redundant and effectively useless. Good Life maintains that access to the parking area is guaranteed by virtue of other provisions in the lease regarding the common elements of the shopping plaza. Accordingly, Good Life submits that since these provisions ensure access to the common elements, and the parking area is a common element, the application judge’s interpretation of the first sentence of the parking covenant cannot be correct. I would not give effect to this submission. The clauses dealing with the common elements do not provide for unlimited access to all of the common elements. Absent the first sentence in the parking covenant, the landlord would not be precluded by the common element provisions in the lease from placing limits on access to the parking area.
[17] Good Life submits in the alternative that the application judge erred in his interpretation of the phrase “commencement of the Lease” in the second sentence of the parking covenant. Specifically, the application judge erred in concluding that the date of “commencement of the Lease” in the parking covenant is the same as the “Commencement Date”, as defined in the lease.
[18] The second sentence of the parking covenant provides that the landlord “shall not reduce the available spaces for Tenant parking available at the commencement of the Lease, during the Term of the lease or any extension thereof.” Rather than prohibiting absolutely the reduction of available spaces, this sentence operates to prohibit the reduction of available spaces after a certain date, namely, the date of “commencement of the Lease”. The issue, therefore, is the determination of that date.
[19] Good Life submits that the date of “commencement of the Lease” should be interpreted as December 24, 2002, the date the conditional offer to lease was accepted and thereby became binding, and not the much later “Commencement Date”. The Good Life lease defines “Commencement Date” as being 90 days after the possession date, which, pursuant to the amendments to the lease, is August 23, 2004, or the date Good Life opens for business, if that date is earlier. Since Good Life only opened for business on January 2, 2005, the “Commencement Date” for the space Good Life was to occupy in the plaza therefore works out to be November 14, 2004, 90 days after the possession date. Good Life argues that because the leases with Royal LePage and the Bank of Nova Scotia were entered into after December 24, 2002, and because these leases granted Royal LePage and the Bank of Nova Scotia the exclusive use of a certain number of parking spaces, Hazeldean contravened the parking covenant “not to reduce the available spaces” for Good Life parking “available at the commencement of the Lease”.
[20] In my view, the application judge was correct. It would make little sense for the commencement of the lease for parking purposes to be a date almost two years before the commencement of the lease for purposes other than parking. Further, on December 24, 2002, the date the offer to lease became binding, Hazeldean was still negotiating with the Municipality regarding the total number of parking spaces required for the entire project. As noted earlier, the number of spaces was ultimately reduced in the course of these negotiations from 292 to 275. It therefore could not have been the intention of the parties that the “available spaces for Tenant parking at the commencement of the Lease” would be determined as of the date that the offer to lease became binding, since at that date, the number of parking spaces that would ultimately be constructed was still inconclusive.
[21] I disagree, however, with the application judge’s conclusion that Hazeldean is at liberty to grant exclusive parking spaces to other tenants in addition to those already granted to the Bank of Nova Scotia and Royal LePage. In my view, when spaces are reserved for other tenants, these parking spaces are no longer “available spaces” for Good Life. The application judge’s interpretation that the reserved spaces are available simply because Good Life clients and staff can access the parking area generally renders the second sentence of the parking covenant meaningless and, in effect, wrongly equates the phrase “access to parking at the property” with the phrase “available spaces for tenant”. Taken to the extreme, this interpretation would mean that Hazeldean could allow other tenants to reserve all of the parking spaces in the shopping plaza. Good Life customers would have access to the parking area, but would have no spaces in which to park. This defeats the clear intent and stated purpose of the clause, which is not only to ensure that “spaces” are available to Good Life clients and staff, but also that the spaces that were “available” to Good Life at the commencement of the lease remain available during the term of the lease and any extension thereof.
[22] Based on the foregoing discussion, I would allow the appeal in part, and declare that the parking covenant in the Good Life lease restricts Hazeldean’s ability to grant reserved parking spaces to tenants of the plaza beyond those already granted on November 14, 2004, the date of commencement of the lease. I would not, however, issue an injunction to the same effect. Hazeldean has indicated before us that it does not intend to grant any additional reserved parking spaces beyond those already in place. I therefore do not consider an injunction to be an appropriate remedy. I would simply issue a declaration.
Royal LePage’s Parking Covenant
[23] Royal LePage claims that it is entitled to 30 reserved parking spaces. Although the application judge dismissed Royal LePage’s application, his reasons do not specifically address the basis for his rejection of Royal LePage’s claim. Royal LePage submits that the trial judge erred in this regard and, at a minimum, the application judge ought to have granted partial relief by declaring that 6 of the 30 spaces could be reserved exclusively for Royal LePage staff and clients.
[24] Although the application judge ought to have given reasons for rejecting Royal LePage’s request for the declaration in respect of the 30 parking spaces, he was, in my opinion, correct in dismissing this portion of Royal LePage’s application. Correctly interpreted, the parking covenant does not grant Royal LePage 30 reserved spaces. The relevant sentence of the parking covenant reads as follows:
Said spaces shall be located on the upper level of the Lands and side of the Lands and 6 of the guaranteed 30 spaces shall be located as indicated in the Schedule 1 and marked reserved for Royal LePage customers or staff.
[25] A clear distinction is made between the 6 spaces that are to be “marked reserved”, and the remaining 24 spaces. Whatever was intended by referring to the 30 spaces as “guaranteed”, it is clear that this reference could not mean that the spaces are reserved exclusively for Royal LePage. Absent marking the remaining 24 spaces as reserved, the spaces can invariably be used by all of the plaza’s tenants.
[26] In the context of the covenant as a whole, the guarantee of the minimum of 30 spaces, therefore, must be providing for unrestricted access to 30 spaces, 24 hours a day, 7 days a week, without charge, as well as specifying where these 30 spaces are to be located on the property of the plaza.
[27] Although Royal LePage’s application for a declaration that it was entitled to 30 reserved parking spaces was dismissed, it is apparent from his reasons that the application judge recognized that Royal LePage did have the right to 6 reserved parking spaces. On appeal, Hazeldean has all but conceded that a declaration to that effect could be issued and, in my view, the parking covenant clearly provides for this right.
[28] As a result, I would allow Royal LePage’s appeal in part, and issue a declaration that Royal LePage is entitled to 6 parking spaces, located as set out in the parking covenant, and that these spaces may be marked as reserved for Royal LePage clients or staff. In light of my disposition of the Good Life appeal, it is clear that the granting of this declaration in the Royal LePage appeal does not affect Good Life’s parking rights.
CONCLUSION
[29] I would allow both the Royal LePage and Good Life appeals in part, and I would issue declarations as follows:
(a) a declaration that, pursuant to the Good Life lease, Hazeldean may not grant reserved parking spaces on the subject property over and above those already provided for by lease as at November 14, 2004; and
(b) a declaration that Royal LePage is, pursuant to its lease, entitled to 6 parking spaces, located as provided in the parking covenant, and that these 6 spaces can be marked as reserved for Royal LePage clients or staff.
[30] In all other respects, I would dismiss both the Good Life and Royal LePage appeals.
[31] In the circumstances, I would not award costs for or against Royal LePage. Royal LePage was justified in bringing and had partial success on this appeal and, although Hazeldean did not strenuously oppose the granting of a declaration as to the 6 parking spaces in its submissions, there was no clear concession to that effect in its materials. I would therefore make no award of costs as between Royal LePage and Hazeldean.
[32] With respect to the Good Life appeal, although Good Life has had some success on this appeal, it was nevertheless unsuccessful regarding the two central points raised on appeal, namely, seeking a declaration that Hazeldean was in breach of the parking covenant, and requesting a permanent injunction. Therefore, in the circumstances, I would award Hazeldean costs against Good Life in the reduced amount of $5,000, inclusive of GST and disbursements.
“Paul Rouleau J.A.”
“I agree K.M. Weiler J.A.”
“I agree J.M. Simmons J.A.”
RELEASED: October 30, 2008