COURT FILE NO.: CV-11-426753
DATE: 20120809
ONTARIO SUPERIOR COURT OF JUSTICE
APPICATION UNDER rules 14.05(3)(d), (g) and (h) of the Rules of Civil Procedure
BETWEEN:
ONTARIO PENSION BOARD
Applicant
– and –
H&M HENNES & MAURITZ INC.
Respondent
Bradley E. Berg and Kiran Patel, for the Applicant
Arie Gaertner and Bruce N. Baron, for the Respondent
HEARD: June 7, 2012
Stinson J.
[1] This is an application by the Ontario Pension Board ("OPB") for a declaration that the option of the respondent H&M Hennes & Mauritz Inc. ("H&M") to terminate its lease at a shopping mall owned by OPB expired before it was exercised by H&M. According to the lease, the deadline for the exercise of the option was determined by reference to the "Commencement Date" of the term of the lease. The parties come to court seeking a determination of the proper Commencement Date of the term, because this will determine whether H&M's notice of termination was valid or not. The case turns on the proper interpretation of the lease.
facts
Overview
[2] The lease in question was for retail premises comprising some 20,000 square feet at a shopping mall known as the Erin Mills Town Centre, located in Mississauga, Ontario. The initial term of the lease was 10 years. The lease also included an option exercisable by the tenant to terminate it early. The option to terminate was exercisable during a limited period of time, namely, during the two calendar months following the 5th anniversary of the "Commencement Date" as defined in the lease.
[3] OPB asserts that the Commencement Date of the term was October 27, 2005, a date which is recited in a notice of lease registered on title to the property by H&M. As such, the two month window for the exercise of the option to terminate ran from November 1, 2010 to December 31, 2010. For its part, H&M contends that on the true construction of the lease, the Commencement Date was November 14, 2005. If that interpretation is correct, the window for exercising the option to terminate ran from December 1, 2010 to January 31, 2011. H&M therefore contends that its notice of termination delivered January 27, 2011 advising of its intention to vacate the premises at the end of January 2012 was effective. If OPB's position is correct, then H&M's notice of termination was delivered out of time, and was ineffective to terminate the lease. If so, H&M stands exposed to a claim for a significant amount of unpaid rent, since it vacated the premises in accordance with its notice of termination.
[4] At the time the lease was executed a previous owner was the landlord of the mall, Erin Mills Town Centre Corporation ("EMTCC"). EMTCC sold the mall to OPB in late 2010. OPB thus inherited the H&M lease and was not privy to the original negotiations or occupancy arrangements between EMTCC and H&M.
[5] As part of its due diligence in preparing to purchase the mall from EMTCC, OPB became aware of H&M's option for early termination. Having regard to the amount of space leased by H&M, OPB was aware that the early termination of the H&M lease could have a significant impact on the cash flow of the property, and hence its value. Accordingly, as part of its purchase negotiations with EMTCC, OPB negotiated a post-closing adjustment whereby the purchase price would be reduced if H&M exercised its option to terminate on or before December 31, 2010. The December 31, 2010 date was selected on the basis of OPB's belief that the option to terminate expired on that date. On this basis, OPB closed its purchase of the shopping mall on December 16, 2010.
[6] At the time OPB completed the purchase of the shopping mall, H&M had not provided a notice of its intention to terminate the lease. Given the financial implications relating to the option to terminate, on several occasions prior to December 31, 2010, OPB asked H&M whether it intended to exercise its option to terminate. Although H&M was aware of OPB's position that the termination window expired at the end of December 2010, it provided no notice to OPB prior to that date. Instead, H&M relied on its own belief that the termination window did not expire until the end of January 2011. H&M ultimately delivered its notice of termination on January 27, 2011, 4 days before the day upon which it asserts that the option to terminate expired. Because the notice of termination was not served by H&M until late January 2011, OPB had no recourse against EMTCC for an adjustment to the purchase price. Instead, it commenced these proceedings as against H&M.
The scheme of the Lease
[7] I have set out in Appendix A to these reasons the portions of the lease that bear upon the issues before me. The original lease was dated January 5, 2005. It was amended as of July 1, 2005. In the balance of these reasons I will refer to the "Lease", by which I mean the original, signed lease as amended.
[8] In January 2005 when the Lease was originally signed, the premises were occupied by and subject to leases in favour of third parties. EMTCC had to obtain vacant possession of the premises and complete certain landlord's work before the premises could be turned over to H&M to enable it to install its store fixtures.
[9] Pursuant to section 3.05 of the Lease, H&M's "Fixturing Period" was to commence on August 15, 2005 (defined by the parties as the "Possession Date") and run for 90 days, during which it was entitled to occupy the premises rent free. The parties contemplated, however, that EMTCC might encountered some delay in obtaining vacant possession of the premises and completing its landlord's work. They addressed this subject in the Lease in several ways, as follows:
(a) by providing (in Section 17.19) for a right in the landlord to delay the Possession Date (and, thus, the start of the Fixturing Period);
(b) by providing (in Section 3.06) for payment of liquidated damages by landlord to tenant if occupancy was delayed; and
(c) by providing (in Section 3.03) for a delay in the Commencement Date of the term and of the tenant's rental obligations, in the event the Fixturing Period ran into certain specified periods: between November 15 and the immediately following February 24 or between April 10 and the immediately following August 26 (each period being defined as "Window Period"). The purpose of the Window Period was to ensure that the tenant was not required to take possession and open for business too near or just after a high season.
[10] As events unfolded, EMTCC was able to deliver possession of the premises to H&M by August 15, 2005. H&M then began its fixturing work. It was able to finish that work and open for business by October 27, 2005. It did not begin to pay rent, however, until November 14, 2005, the day after the expiry of the 90 day Fixturing Period. Because EMTCC was able to complete its work and deliver possession of the premises to H&M for fixturing prior to August 15, 2005, the delay of the Possession Date and Window Period provisions of the Lease were neither activated nor acted upon.
[11] The term of the Lease was 10 years, as more particularly specified in Section 3.03. The term was to commence on the "Commencement Date" which was defined in Section 3.03 as "the day following the expiry of the Fixturing Period (being the period described in Section 3.05)". Section 3.03 went on to provide:
Within a reasonable time after the Commencement Date occurs, the Landlord and Tenant will confirm the Commencement Date in writing and such confirmed Commencement Date will apply for this Lease.
[12] Under Section 17.10 the Tenant was prohibited from registering the Lease. It was permitted, however, to register a notice of lease in a form satisfactory to the Landlord. I will return to this topic shortly.
[13] The final relevant provision was contained in Section 17.18, entitled "Tenant's Right to Terminate." In essence, that provision gave the Tenant the option to terminate the term of the Lease early, by delivering a written notice to that effect. Section 17.18 required the Tenant to give notice of termination within a specified time period, as follows:
within sixty (60) days following the expiry of the fifth (5th) full twelve calendar month period of the Term ….
[14] In other words, the notice of termination was to be given in the 60 day window that began on the first day of the first full calendar monthly following the fifth anniversary of the Commencement Date, since that was the date on which the Term of the Lease began (per Section 3.03).
[15] Significantly, Section 17.18 further provided that, in the event the Tenant failed to exercise its right to terminate within the specified time limit, it had no further right to do so.
The notice of lease
[16] After H&M took possession of the premises, its legal counsel registered a notice of lease on title to the property. Before doing so, a real estate clerk in the office of H&M's legal counsel e-mailed the parent company of EMTCC, Cadillac Fairview ("CF") on March 20, 2006 and asked this question:
Has the actual Commencement Date for this lease been confirmed, pursuant to s. 3.03(the term) of the Lease? I require the established Commencement Date for the purpose of registration of the Notice of Lease.
[17] A representative of CF responded to this inquiry by e-mail dated March 2, 2006, stating that "[t]he property [sic] has advised me that the Commencement Date of the lease was October 27, 2005. A copy of the letter which was sent to the tenant is attached for your information." Attached was a letter from CF to H&M dated November 4, 2005 which stated, among other things, that the "opening date … has been confirmed as October 27, 2005." The same letter also stated that "[A]ccording to your lease rent for H&M commences on November 14, 2005."
[18] The law clerk subsequently asked a representative of H&M to confirm that October 27, 2005 was the Commencement Date. In response, the H&M representative stated that the "H&M location at Erin Mills Town Centre opened on October 27, 2005."
[19] Based upon the foregoing exchanges, the law clerk at H&M's legal counsel prepared a formal Notice of Lease which stated, among other things, as follows:
(a) Term: The term of the Lease ten (10) years from the Commencement Date as defined in the Lease which the parties have confirmed to be October 27, 2005, and expires on the 10th anniversary of the Commencement Date subject to adjustment as provided in the Lease.
[20] The draft notice of lease was approved by CF. It was registered on title on April 24, 2006.
OPB purchases the shopping mall
[21] In or around July 2010, OPB became involved in discussions regarding the potential acquisition of the shopping mall. Discussions about the potential acquisition progressed and eventually OPB was provided with copies of relevant documents relating to the leases at the mall, including the H&M Lease. As part of its due diligence process, OPB reviewed the H&M Lease and the notice of lease. According to its evidence, based on its due diligence OPB determined that the Commencement Date for H&M's Lease was October 27, 2005.
[22] Based on its belief that the Commencement Date was October 27, 2005, OPB calculated that the H&M option to terminate arose on November 1, 2010, (5 full 12 calendar months after October 27, 2005) and expired on December 30, 2010 (60 days after November 1, 2010.) According to its evidence, OPB proceeded with the transaction to purchase the shopping mall on the basis that H&M's termination right had to be exercised by the end of 2010.
[23] Recognizing that the termination of the H&M Lease would have an impact on the value of the shopping mall, OPB negotiated a post-closing adjustment whereby it would pay a lower purchase price if H&M exercised its option to terminate on or before December 31, 2010. OPB negotiated this post-closing adjustment based on its belief that October 27, 2005 was the Commencement Date of the Lease, and thus the option to terminate expired on December 31, 2010. With that post-closing adjustment agreement in place, OPB closed the purchase on December 16, 2010.
The exercise of the option to terminate
[24] Given the financial implications relating to H&M's option to terminate, on several occasions leading up to December 31, 2010, OPB asked H&M whether H&M intended to exercise its option to terminate. During the course of those communications, OPB made it plain to H&M that any notice of termination had to be given prior to the end of 2010, failing which H&M's option to terminate the Lease would expire. Although it was aware of OPB's position regarding the expiry of the option to terminate, H&M did not give notice of termination prior to the end of December 2010. As a result, OPB did not receive any post-closing adjustment from the vendor to reduce the price paid by OPB to buy the shopping mall.
[25] By letter dated January 21, 2011, and delivered to OPB on January 27, 2011, H&M gave notice of its election to terminate the Lease pursuant to Section 17.18. The H&M notice of termination was delivered on the basis of H&M's position and belief that the Commencement Date for the Term of the Lease was November 15, 2005, the date following the expiry of the Fixturing Period. Based upon that premise, the 60 day window within which H&M was entitled to give notice of termination did not begin to run until December 1, 2010 and expired at the end of January 2011.
[26] Following the delivery of the H&M notice of termination, OPB disputed its validity. The parties were unable to resolve their disagreement. This application ensued. During the course of the proceedings, H&M proceeded to close its store and vacate the premises.
issues and analysis
[27] The sole issue to be determined on this application is the proper Commencement Date for the Lease. OPB submits that October 27, 2005 should be determined to be the Commencement Date by reason of (a) the express wording of the Lease, including the clause which required the parties to confirm the Commencement Date in writing and (b) the registration of the notice of lease on title by H&M, confirming its Commencement Date was October 27, 2005. Having regard to the interpretive rule of contract law that the court should give effect to the intention of the parties as expressed in their written agreement, OPB argues that the requirement of the parties to confirm the Commencement Date in writing is clear and unambiguous. It further argues that the parties proceeded to do so, when the draft notice of lease was approved by CF/EMTCC and registered by H&M. Further, the purpose of the notice of lease was to provide notice to third parties, upon which OPB was entitled to rely. It did so, and it should not be prejudiced by H&M's mistake.
[28] H&M argues that OPB was aware of the discrepancy between the Commencement Date contained in the notice of lease and the actual Lease before it closed its purchase transaction. Having been aware, OPB was put on enquiry and should have realized that the notice of lease was erroneous and the purported Commencement Date recited in it was inconsistent with the terms of the Lease. Based on a proper construction of the Lease, the Commencement Date was November 15, 2005. The requirement for the parties to confirm the Commencement Date in writing arose only in the event the Possession Date was delayed and the Fixturing Period was extended into a Window Period, which events did not occur. As a result, the Commencement Date was that provided in the Lease (November 15, 2005) and the parties never agreed otherwise. As a result, the notice of termination was timely.
[29] A preliminary point to address is whether the notice of lease amended the Lease, such that the Commencement Date recited in the notice of lease should be read as somehow altering the formal Lease between the parties. It was conceded by OPB that this was not the case.
[30] In order to validly amend the Lease, the parties would have had to comply with the formality stipulated in the entire agreement clause, found in Section 2.04. It required that any alteration was not binding unless it was in writing and signed by both the landlord and tenant. The alleged confirmation of the Commencement Date did not comply with the requirements of Section 2.04.
[31] A second point to address regarding the significance of the contents of the notice of lease is the significance of a discrepancy (if such exists) between the notice of lease and the Lease itself. Registration of a notice of lease under the Land Titles Act, R.S.O. 1990, c. L.5 gives actual notice of the terms of the lease: see Russo v. Field, [1973] S.C.R. 466 (S.C.C.) In any event, it is undisputed that OPB had reviewed the Lease prior to closing the purchase. It therefore had actual notice of the provisions contained in it. Additionally, prior to closing OPB received a confidential information memorandum which recited that the Commencement Date of the term was the date following the expiry of the Fixturing Period – November 13, 2005. On its face, therefore, this information conflicted with the contents of the notice of lease. At the very least, OPB was put on enquiry, and it could not rely on the contents of the notice of lease as determinative of the Commencement Date.
[32] The fundamental question to address is the proper interpretation of the contents of the Lease. It is a cardinal interpretative rule that the court should give effect to the intention of the parties as expressed in their written agreements: see KPMG Inc. v. Canadian Imperial Bank of Commerce, [1998] O.J. No. 4746 at para. 5 (C.A.).
[33] Leaving aside the contents of the notice of lease, the question becomes whether the Lease, properly construed, contains language that reflects the intention of the parties to designate a specific date as the Commencement Date. In my view, it does.
[34] As discussed above, at the time the Lease was signed there was uncertainty whether the landlord would be able to make the premises available for fixturing by H&M by a specified date. A target date – the "Possession Date" – was inserted, being August 15, 2005. That signaled the intended start of the 90-day Fixturing Period. The notional Commencement Date was the day after the expiry of the 90 days provided for the Fixturing Period. By means of a simple arithmetical calculation, therefore, the Commencement Date contained in the Lease was 91 days following August 15, 2005, namely, November 14, 2005.
[35] By reason of the possibility that the landlord might not be able to meet the August 15 deadline for giving possession of the premises to H&M, the parties included the proviso found in Section 17.19, which allowed the landlord to delay the Possession Date. In the event that provision were invoked, the Fixturing Period provided in Section 3.05 would commence at a later date, in consequence of which the Commencement Date provided in Section 3.03 would also be extended. That extension or delay in the Commencement Date beyond the otherwise-specified date of November 14, 2005, however, would only come into play in the event the landlord's right to delay possession under Section 17.19 was exercised. In other words, on a proper construction of the Lease, it was the intention of the parties that the Commencement Date was to be November 14, 2005 unless altered in the fashion I have described.
[36] As indicated by the facts I have previously recited, Section 17.19 was not invoked by the landlord. H&M took possession on August 15, 2005. The Fixturing Period therefore ran to November 13, 2005. The intended Commencement Date was not altered under the terms of the Lease.
[37] One cannot, however, overlook the following language in Section 3.03:
Within a reasonable time after the Commencement Date occurs, the Landlord and the Tenant will confirm the Commencement Date in writing and such confirmed Commencement Date will apply for this Lease.
OPB submits that these words are unambiguous and required the parties to confirm the Commencement Date in writing, after it occurred.
[38] To the extent the exchange or exchanges between the parties in March 2006 and the registration of the notice of lease purported to "confirm in writing" the Commencement Date (which I do not consider they did, given the inaccuracies and informalities that accompanied them) in my view, that confirmation was erroneous. By its own terms, the Lease specified November 14, 2005 as the Commencement Date, subject to the possible operation of Section 17.19. In the circumstances, any purported confirmation of the Commencement Date as October 27, 2005 was plainly wrong. To the extent that such confirmation would fix the Commencement Date as October 27, 2005, it would conflict with the express language of the contract, designating November 14, 2005 as the Commencement Date.
[39] What, then, is the meaning of the word "confirm" as used in Section 3.03 of the Lease? The plain, ordinary, or literal meaning of words, read in context and in light of the entire agreement and its surrounding circumstances, should be adopted, except where to do so would result in a commercial absurdity or create some inconsistencies with the rest of the contract: see Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, at para. 71 (S.C.C.). According to the Oxford English Dictionary, the plain meaning of the word "confirm" is to "provide support for the truth and correctness of" or to "rectify". One cannot confirm as correct something that is incorrect. Accordingly, the only Commencement Date capable of confirmation (as of March 2006) was November 14, 2005. Since October 27, 2005 was not the correct Commencement Date, such date was incapable of being "confirmed".
[40] The objective of interpreting a contract is to discover and give effect to the parties' true intentions as expressed in the written document as a whole at the time the contract was made: see Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210 at para. 118 (S.C.C.). It was the true intention of the parties at the time the contract was made that the tenant would enjoy a rent free period up to the expiry of the Fixturing Period. In the event it opened for business prior to that date, the rent free period would continue. To have the Commencement Date coincide with the store opening date, as is suggested by OPB, would contradict that intention, and deprive H&M of its rent free period.
[41] The requirement in Section 3.03 of the Lease to have the parties confirm the Commencement Date in writing resulted from the possibility that, at the time the Lease was entered into, the Commencement Date could occur on one of several dates. Once, however, the tenant had opened for business prior to the end of the Fixturing Period, the only possible Commencement Date could be the day following the expiry of the Fixturing Period, namely, November 14, 2005. Accordingly, a formal “confirmation” of the Commencement Date became entirely redundant. While that provision may have been desirable for purposes of recording the actual Commencement Date in the event Section 17.19 had been invoked (or to signify that Section 17.19 had not been invoked to alter the Commencement Date) that was its limited purpose. To give it greater effect due to an erroneous “confirmation” to the point where it would alter the express Commencement Date spelled out in the Lease would, in my view, be to give greater effect to those words than the parties intended.
[42] I therefore conclude that, on a proper construction of the Lease, the intention of the parties was that the Commencement Date was to be November 14, 2005 unless possession was delayed as contemplated by Section 17.19. Since that did not occur, the Commencement Date was unaltered. The purported confirmation of the Commencement Date as October 27, 2005 contained in the notice of lease was at odds with the express language of the Lease, was never expressly agreed to by the parties, and was ineffective to alter its terms. OPB was on notice of this discrepancy and ought to have made further enquiries.
Equitable estoppel
[43] During the course of argument I raised with the parties the question whether, having registered the notice of lease naming October 27, 2005 as the Commencement Date, H&M could now argue otherwise, in light of the reliance placed by OPB on that notice. I was particularly concerned whether the principle of estoppel by representation might apply. At my request, the parties made supplementary submissions in writing on this point.
[44] On reflection, and having received the supplementary submissions of the parties (for which I express my appreciation), I have concluded that the principle of equitable estoppel does not apply. While it is true that H&M registered the notice of lease, the evidence is uncontradicted that the OPB had actual notice of the Lease. Moreover, the summary of the Lease contained in the pre-purchase confidential information memorandum specified a Commencement Date that conflicted with the notice of lease. As I have noted, in the circumstances, OPB was put on its enquiry. It cannot claim to be an innocent third party purchaser without notice: it was aware of the discrepancy but failed to make further enquiries.
conclusion and disposition
[45] For these reasons, I conclude that the Commencement Date of the term of the Lease was November 14, 2005. As a consequence, the notice of termination given by H&M on January 27, 2011 was delivered within the specified period and was effective. A declaration shall issue accordingly.
[46] In relation to costs, the parties have agreed that the successful party (H&M) should recover the all-inclusive sum of $55,000 from the losing party (OPB) and I so order.
___________________________ Stinson J.
Released: August 9, 2012
Appendix A
ARTICLE I - DEFINITIONS
Section 1.01 Definitions
The following definitions apply in this Lease.
"Commencement Date": the date specified in Section 3.03.
"Fixturing Period": the period determined under Section 3.05.
"Term": the period described in Section 3.03
ARTICLE II – INTENT AND INTERPRETATION
Section 2.04 Entire Agreement
Whether or not the Tenant is permitted to take possession of the Premises, and whether or not it pays a deposit or any instalment of Gross Rent or other Rent which is accepted by the Landlord, no change which party makes to the form of this Lease will be binding on the landlord other party even if it is brought to the landlord other party's attention, until the landlord both the Landlord and the Tenant execute this Lease and initial the change or a page of this Lease containing the change and the Lease is delivered to tenant both parties, The Lease includes the Schedules attached to it and the Rules and Regulations adopted under Section 17.01. The parties acknowledge and agree that the provisions contained in Schedule "E" amend, replace or supersede, as the case may be, those contained in this Lease. There are no covenants, promises, agreements, conditions or understandings, either oral or written, between the parties concerning this Lease, the Premises, the Shopping Centre or any matter related to all or any of them, except those that are set out in this Lease. No alteration, amendment, change or addition to this Lease is binding upon the Landlord unless it is in writing and signed by the Tenant and two authorized representatives of the Landlord.
ARTICLE III – GRANT AND TERM
Section 3.03 The Term
The Tenant will have and hold the Premises for the term (the "Term") which, unless sooner terminated is:
(a) the period of ( ) years, ( ) months, and ( ) days, commencing on the day of , 20 .
OR
(b) the period (i) commencing on the date (the "Commencement Date") which is the earliest of (1) the date the Tenant opens its business to the public in any part of the Premises, or (2) the day following the expiry of the Fixturing Period (being the period described in Section 3.05); and (ii) ending on the tenth (10th) anniversary of the last day of the calendar month immediately preceding the month in which the Commencement Date occurs (unless the Commencement Date is not the first day of a month, in which case the Term shall end on the tenth (10th) anniversary of the last day of the month in which the Commencement Date occurs), provided that should such anniversary date fall within the months of October, November or December, the Term will be extended to the last day of January following such anniversary date. Within a reasonable time after the Commencement Date occurs, the Landlord and the Tenant will confirm the Commencement Date by notice to the Tenant in writing and such confirmed Commencement Date will apply for this lease.
Notwithstanding anything to the contrary contained elsewhere herein, if as a result of circumstances beyond the Tenant's control including a delay caused by the Landlord, the Commencement Date would occur between (i) November 15th and the immediately following February 24"', or (ii) April 10th and the immediately following August 26th (each a "Window Period"), then the Commencement Date shall instead be, and the Tenant's Obligation to pay any rental obligations hereunder shall instead commence upon, the earlier of (a) the first day following the end of any such Window Period, or (b) the date on which the Tenant opens for business in the Premises. The Tenant will have the right, at its option, to open for business during such Window Period, subject to the foregoing.
Section 3.05 Fixturing Period
The Tenant shall have a maximum period of ninety (90) days to complete the Tenant's Work (the "Fixturing Period") which, subject to the provisions of Section 17.19, shall commence on the 15th day of August, 2005 ("Possession Date"), and shall expire on the earliest of (i) the date immediately prior to the date upon which any part of the Premises are opened to the public for business, or (ii) November 13, 2005. During the Fixturing Period, the Tenant shall not be obligated to pay Gross Rent, Percentage Rent or Additional Rent, but the Tenant shall be subject to all of the other terms and conditions of this Lease insofar as they are applicable including, without limitation, the obligations to pay Business Taxes if applicable, Charges for Utilities, the obligation to maintain insurance pursuant to the Lease, and the provisions relating to the liability of the Tenant for its acts and omissions, and the acts and omissions of its servants, employees, agents, contractors, invitees, concessionaires and licenses and the indemnification of the Released Persons.
Section 3.06 Late Delivery
Subject to the provisions of Section 17.19, in the event the Landlord falls to deliver the Premises with all work to be performed by the Landlord substantially complete on or before the Possession Date (unless such failure is caused by circumstances beyond the Landlord's control including delays caused by the Tenant), then the Landlord shall pay the Tenant as liquidated damages for such failure to timely deliver, the parties hereto agreeing that such liquidated damages are a reasonable measure of the Tenant's loss and that it would be very difficult or impossible to determine the actual loss should the Landlord so fail to timely deliver (the "Late Delivery Amount) as follows: (a) an amount equal to one day of Gross Rent for each day of late delivery for the first thirty (30) days after the Possession Date; (b) plus two (2) days of Gross Rent for each day of delay thereafter. If the Landlord fails to pay the Tenant the Late Delivery Amount, the Tenant may offset same against the next instalment of Rent coming due under the Lease until fully expended.
If delivery of the Premises is delayed by the Landlord (for reasons other than circumstances beyond the Landlord's control Including delays caused by the Tenant) so that the Flxturing Period ends during a Window Period, then the number of days of delay shall, for the purposes of calculation of the Late Delivery Amount, include the number of days the Commencement Date is postponed under Section 3.03 by virtue of the Commencement Date otherwise occurring within the Window Period.
For example, if the Premises are delivered on August 29 instead of August 15 the delay is 15 days. However, since the Fixturing Period is 90 days, the Commencement Date would occur during the Window Period (November 29). In that case, the Tenant is entitled to elect to postpone the Commencement Date and the opening to the earlier of the date the Tenant opens for business or February 25"'. If the Tenant In this example did not open until February 25, the Late Delivery Amount would be calculated on the original 15 days delay plus the number of days between November 29 and February 25.
In the event the Tenant falls to open the Premises for business within ninety (90) after the Possession Date (the "Late Opening Date") (unless such failure is caused by circumstances beyond the Tenant's control including delays caused by the Landlord); then the Tenant shall pay the Landlord as liquidated damages for such failure to timely open, the parties hereto agreeing that such liquidated damages are a reasonable measure of the Landlord's loss and that It would be very difficult or impossible to determine the actual loss should the Tenant so fall to timely open (the "Late Opening Amount"), as follows: (a) an amount equal to one day of Gross Rent for each day of late opening the first thirty (30) days after the expiry of the Fixturlng Period; (b) plus two (2) days of Gross Rent for each day of delay thereafter.
If opening of the Premises for business is delayed by the Tenant beyond the Fixturing Period (for reasons other than circumstances beyond the Tenant's control including delays caused by the Landlord) so that the Tenant does not open during a Window Period, then the number of days of delay shall, for the purposes of calculation of the Late Opening Amount, Include the number of days the Commencement Date is postponed under Section 3.03 by vitue of the Commencement Date otherwise occurring within the Window Period.";
Section 17.10 Registration
The Tenant will not register or permit the registration of this Lease or any assignment or sublease or other document evidencing an interest of the Tenant or anyone claiming through or under the Tenant in this Lease or the Premises except that, subject to the Tenant paying the Landlord's costs and expenses. The Tenant may register a notice of lease or caveat which describes the parties, the Term, and contains the other Gross information required under the applicable legislation, but the notice of lease or caveat must be in form satisfactory to the Landlord, acting reasonably. The Landlord may, at the Landlord's expense, require the Tenant 10 execute promptly whatever document the Landlord requires for registration on the title to the Shopping Centre or any part of it in connection with this Lease. If the Shopping Centre is comprised of more than one parcel of land, the Landlord may direct the Tenant as to the parcel(s) against which registration may be effected.
Section 17.18 Tenant's Right to Terminate
So long as: (a) the Tenant is H&M HENNES & MAURITZ INC.; (b) the Tenant is itself in occupation of and conducting business in the whole of the Premises, and (c) the Tenant is not in default under this Lease, then the Tenant may, within sixty (60) days following the expiry of the fifth (5th) full twelve calendar month period of the Term (the ''Trigger Year"), at Its option, terminate this Lease upon giving the Landlord, three hundred and sixty-five (365) days' prior written notice.
If the Tenant exercises its right as aforesaid,
(i) the Tenant covenants and agrees to surrender the Premises and deliver up vacant possession thereof to the Landlord upon the expiration of the .said three hundred and sixty-five (365) day notice period (the "Termination Date") and all Rent shall be adjusted as of the Termination Date. All amounts due and owing by the Tenant pursuant to this Lease shall become due and payable in full as of the Termination Date, and the Tenant shall be discharged from all further obligations under this Lease. The Tenant shall have no recourse against the Landlord, or those for whom it is in law responsible, for damages or otherwise; and
(ii) on the Termination Date the Tenant shall pay to the Landlord an amount equal to six (6) months Rent payable under this Lease.
If the Tenant falls to exercise its right contained in this Section 17.18 within the time limit set herein, then the Tenant's right will be deemed null and void and of no further force or effect.
Section 17.19 Landlord's Right to Delay Possession Date
The Parties acknowledge that the Premises are presently occupied by and subject to leases in favour of third parties. In the event that the Landlord is delayed in obtaining vacant possession of the Premises from said third parties or in the completion of the Landlord's Work, then it is understood and agreed that:
(a) the Landlord shall have the right (without payment of the Late Delivery Amount) to delay the Possession Date, the Commencement Dale and all other relevant dates set out in this Lease upon written notice to the Tenant to be delivered to the Tenant at least seven (7) months prior to the Commencement Date, (the "First Delay"), so that the Commencement Date of this Lease will occur between February 25, 2006 and April 9, 2006 or between August 24, 2006 and November 14, 2006, the precise date to be determined by the Landlord and set out in the First Delay notice; and
(b) in the event of any subsequent delay after the First Delay as set out in Section 17.19(a) above, (the "Second Delay"), the Landlord shall have the right, at its option, to be exercised by way of written notice to the Tenant no later than seven (7) months prior to the revised Commencement Date set out in the First Delay notice, (and without payment of the Late Delivery Amount). to:
(i) terminate this Lease; or
(ii) delay the Possession Date, Commencement Date and all other relevant dates sot out in this Lease so that the Commencement Date of this Lease will occur between August 24, 2005 and November 14, 2006 or between February 25, 2007 and April 9, 2007, the precise date to be determined by the Landlord and set out in the Second Delay notice. In the event the Landlord elects to give the Tenant a Second Delay notice, the Tenant shall have the right, at its option, to terminate this Lease upon written notice to the Landlord to be delivered by the Tenant within fifteen (15) days of receipt by the Tenant of notification from the Landlord of the Second Delay.
If the Tenant fails to exercise its right to terminate as set out in this Section 17.19(b) above within the time limit set out, then the Tenant's right to terminate this Lease shall be deemed null and void and of no further force and effect, and the Possession Date, the Commencement Date and all other relevant dates shall be delayed as set out In the Landlord's notice of the ….
The Tenant agrees to execute such documentation required by the Landlord to give effect to the foregoing provisions of this Section 17.19.
Ontario Pension Board v.
H&M Hennes & Mauritz Inc., 2012 ONSC 4597
COURT FILE NO.: CV-11-426753
DATE: 20120809
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ONTARIO PENSION BOARD
Applicant
– and –
H&M HENNES & MAURITZ INC.
Respondent
REASONS FOR JUDGMENT
Stinson J.
Released: August 9, 2012