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Option to purchase in a commercial lease does not automatically pass with an assignment in law.
The tenant held a commercial lease containing an option to purchase the shopping centre.
The tenant subsequently subleased the premises for the entirety of the term.
The landlord sought a declaration that the option to purchase was no longer exercisable by the tenant, arguing the sublease constituted an assignment in law that carried the option with it.
The application judge granted the declaration.
On appeal, the Court of Appeal reversed, holding that while a sublease for the entire term may be an assignment in law, an option to purchase is severable and does not automatically pass with the assignment if the parties intended otherwise.
The court found the parties clearly intended to preserve the option with the tenant.
Vendor's lien yielded to the first mortgage registered on closing.
Appeal in a mortgage priority dispute arising from the sale of a vacant lot where the purchaser granted a first construction mortgage and a second purchase money mortgage on closing.
The application judge had held that the unpaid vendor's lien took priority over the first mortgage because the first mortgagee had notice of the unpaid purchase price.
The Court of Appeal held that the equities rebutted enforcement of the vendor's lien as between the first and second mortgagees where both mortgages were placed on title on closing in a common transaction intended to finance construction and establish priority by registration.
The court further held that a vendor's lien is not an 'existing claim on the land' released by s. 5 of the Land Registration Reform Act, but limited the first mortgage's priority to the amount of the first advance.
