Court of Appeal for Ontario

Date: 2019-04-25 Docket: C66010

Judges: Doherty, Paciocco and Zarnett JJ.A.

Between

Fountain Tire (London Stoneybrook) Ltd. Applicant (Appellant)

and

2169728 Ontario Ltd. Respondent (Respondent in Appeal)

Counsel

Daniel J. MacKeigan, for the appellant

Michael Lerner and John B. Brennan, for the respondent

Heard and released orally: April 15, 2019

On appeal from: the order of Justice Michael D. McArthur of the Superior Court of Justice, dated September 21, 2018.

Reasons for Decision

[1] The appellant ("Tenant") and the respondent ("Landlord") disagreed over the interpretation of their lease. There were two points of disagreement. First, the appellant maintained that the leased premises included the parking area owned by the City of London and licensed to the respondent by the City on an annual basis. Second, the appellant argued that the respondent's right to exclusive use of certain office space in the leased building did not permit the Landlord to lease that space to a third party.

[2] The application judge found against the appellant on both points, holding, at para. 72:

I find that the lease does not include the area on Block A, Plan 781 designated as Part 1 on Plan 33R-7181. In addition, the respondent is entitled to the use of the office as defined in the lease and is also entitled to the lease this space to third parties subject to the other provisions in the lease.

[3] On the appeal, the appellant renews the same arguments that were made before the application judge. We do not agree with his first submission, but we do agree with the second.

[4] In respect of the first submission, we approach those submissions by accepting that, absent an identifiable error in law, the application judge's interpretation of the contract is entitled to deference in this court.

[5] We see no legal error in the application judge's approach to the interpretative exercise. He clearly set out that approach in his reasons. The question therefore is whether he fell into clear and palpable error in his application of the correct legal principles.

[6] On the first point, the application judge found that on the plain meaning of the word "Property", a defined term in the lease, the parking area owned by the City was not included in the leased premises (see reasons para. 46). The trial judge reviewed the other considerations relevant to the interpretation of the language in the lease and found that none led to an interpretation other than the plain and ordinary meaning of the words in the definition of "Property" provided in the lease. We see no error in that analysis.

[7] On the second point, the application judge found that para. 7.01(d) of the lease allowed the Landlord to lease the "Landlord's office" (a defined term), which was not included in the property leased to the appellant, to a third party. In reaching that conclusion, the application judge said, at para. 64(a):

A plain reading of the lease terms in this regard must take into account that:

a. The exclusive use by the landlord also extended to "its invitees" in this provision.

[8] With respect, para. 7.01(d) of the lease draws a clear distinction between "use", which is reserved exclusively to the Landlord and "access" or "entry", which is afforded to the Landlord and invitees of the Landlord. The trial judge's finding that the right to use the Landlord's office extended to others, including third party tenants, is contrary to the clear language of the lease and ignores the distinction drawn in the lease between "use" and "access or entry". The trial judge's failure to draw the distinction drawn in the language of the operative term constitutes a palpable and overriding error.

[9] The appeal is allowed to the extent that the appellant is entitled to a declaration that para. 7.01(d) of the lease does not permit the Landlord to lease "the Landlord's office" to a third party.

[10] Success is divided. No costs on the motion or the appeal.

"Doherty J.A."

"D.M. Paciocco J.A."

"B. Zarnett J.A."