CITATION: Southlake Regional Health Centre v. Beswick Group Properties Inc., 2015 ONSC 5527
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Southlake Regional Health Centre
Plaintiff
– and –
Beswick Group Properties Inc.
Defendant
Martin Sclisizzi and Alessandra V. Nosko, for the Plaintiff
Kevin L. MacDonald and Jamie M. Sanderson, for the Defendants
HEARD: 2-5 Dec 2014, 10 Feb 2015
Reasons for Judgment
J.C. Corkery J.
1Southlake Regional Health Centre (“Southlake”) and Beswick Group Properties Inc. (“Beswick”) are parties to a lease. Southlake is a large regional hospital located in Newmarket, Ontario. In 2005, in a public-private partnership, Beswick constructed a new hospital building, which it leased to Southlake.
2Under the terms of the lease the parties agreed that basic rent is payable per square foot for the Gross Rentable Area of the Building (the “GRA”). They agreed that the GRA was projected to be 135,000 square feet, subject to final determination by which the GRA “shall be conclusively deemed to be the area of the Building, expressed in square feet, set out in a certificate of the Landlord’s architect.” However, the Landlord’s architect did not set out the area of the Building in a certificate and now the parties disagree on what the GRA is. This is the sole issue for trial.
3On first impression, it might appear that the resolution of this issue is to be found in the opinion of an expert, one who is qualified to measure the area of buildings. Unfortunately, such is not the case. Although the words “Gross Rentable Area” appear nine times in the lease, together with the words “of the Leased Premises”, “of the Building” or “of the Project”, nowhere does the lease properly define what GRA is or how it to be measured.
4“Area” is a word subject to many definitions and interpretations in the building industry. The published industry standard defines, references or provides instructions for measuring no less than thirteen different “areas”: “Gross Building Area”, “Gross Measured Area”, “Rentable Area”, “ Floor Rentable Area”, “Building Rentable Area”, “Basic Rentable Area”, “Total Rentable Area”, “Office Area”, “Store Area”, “Building Common Area”, “Floor Common Area”, “Usable Area” and “Floor Usable Area”. The standard does not define or mention “Gross Rentable Area”.
5Understanding what is intended by the use of the word “area” in the industry is complicated by the fact that, according to the evidence of the project architect (Beswick’s expert in this trial), terms for different areas are used rather loosely.1
6Understanding the parties intention as expressed in the lease is further complicated by confusing wording and circular, redundant and inconsistent references.
A. Overview
1. Building history
7In 2004, Southlake entered into a joint venture agreement with a company related to Beswick to plan, design and construct a new hospital building, referred to as the Medical Arts Building (the “MAB”). It was contemplated that Beswick would build the MAB and then lease it back to Southlake.
8Initially, in April of 2004, when the joint venture agreement was signed, it was anticipated that the hospital would lease three of the six floors of the MAB, at least 35,000 square feet. By January of 2005, Southlake had agreed to lease the entire building.
9In the spring or 2005, the design for the MAB was finalized. On July 12, 2015 construction plans were issued for tender. The lease was signed on September 14, 2005 and construction began the next day.
2. Litigation history
10This issue before the court on this trial is the product of litigation initiated by applications brought by each of the parties, Beswick in December 2013 and Southlake in January 2014. Justice Healey heard the applications. On February 27, 2014, she ordered that three issues proceed to trial: Southlake Regional Health Centre v. Beswick Group Properties Inc., 2014 ONSC 1319 at para 52. The second and third issues have been resolved, leaving only the first issue for trial: “The square footage of the MAB and quantum of basic rent payable from October 1, 2013 onward.”
11On August 29, 2014, Justice Healey heard a motion for directions in connection with the remaining issue for trial. The question was whether the issue could proceed to trial directly or whether her original order necessitated the commencement of a fresh action with new pleadings, productions and examinations for discovery. Justice Healey ordered that the issue proceed directly to trial on an expedited basis. In her reasons, she concluded that the issue to be tried did not relate to the parties' intentions and expectations after the lease was signed and that there was no ambiguity in the lease that would permit parol evidence of the parties conduct after the lease was signed.2
3. Rulings
12At the outset of this trial, Beswick brought a motion seeking an order confirming that the issue of whether parol evidence was admissible at trial had been decided by Justice Healey, and was therefore res judicata or, in the alternative, that parol evidence was not admissible at trial on the basis that the lease at issue is not ambiguous.
13I ruled that Justice Healey had decided that there was no ambiguity in the lease and thus parol evidence of the subjective intention or subsequent conduct of the parties after the lease was signed was inadmissible. I accepted her decision as binding upon me pursuant to sub-rule 38.10(1)(b),3 which permits her to refer an issue to trial with directions. Alternatively, if I was wrong in ruling that Justice Healey had decided the issue, I reached my own conclusion that there was no ambiguity in the contract that would permit the admission of parol evidence of the subsequent conduct of the parties.
B. Issue
14Framed as a question, the triable issue identified by Justice Healey is:
What is the square footage of the MAB and quantum of basic rent payable from October 1, 2013 onward?
15Given that Basic Rent is determined under Schedule “D” to the lease to be an amount per square foot for the GRA per year, the answer to this question is ultimately to be found in the determination of the GRA.
16Each party retained its own expert to measure the GRA of the MAB. Their measurements are not in dispute. What remains in dispute is what is to be measured. Both experts relied upon the Building Owners and Managers Association (BOMA) International’s Standard Method for Measuring Floor Area in Office Buildings (the “BOMA Standard”). While acknowledging that GRA is not a term defined or mentioned in the BOMA Standard, each expert considered the Standard in providing his opinion as to the proper interpretation of the meaning of GRA. Ultimately, this is the issue for the court to determine.
C. The Lease
17On September 14, 2005, the parties executed the lease.
18The relevant terms of the lease read as follows:
ARTICLE 1.00 DEFINITIONS
1.01 Definitions
In this lease, unless there is something in the subject mater or context inconsistent therewith:
(a) “Additional Rent” means all amounts in addition to Basic Rent required to be paid by the Tenant pursuant to this Lease whether or not the same are designated Additional Rent or are payable to the Landlord or otherwise;
(c) “Basic Rent” means the rent specified in Section 4.01;
(e) “Buildings” means all structures, improvements, facilities, and amenities on the Lands and appurtenances thereto as they exist on the Lands from time to time;
(g) “Lands” means the lands described in Schedule “A” hereto, and shall also include such additional lands as the Landlord shall from time to time own lease or otherwise control and declare by notice to the Tenant to have become constituted as part of the Lands and shall exclude such lands as the Landlord shall declare by notice to the Tenant to have been excluded, and ceased to constitute a part of the Lands, provided that no such declaration shall have the effect of increasing or decreasing the Lands to an extent which is more than 5% of the area of the Lands;
(j) “Leased Premises” means the Project;
(m) “Project” means the Lands and Buildings, as they may be respectively constituted from time to time and known as The Medical Arts Building;
(n) “Rent” means the aggregate of Basic Rent and Additional Rent;
(o) “Gross Rentable Area” in the case of the Leased Premises means the area, expressed in square feet, set out in Section 2.01 subject to a final determination made pursuant to Section 4.03;
ARTICLE 2.00 DEMISE
2.01 Leased Premises
The Landlord hereby demises and leases the Leased Premises to the Tenant for the Term upon and subject to the covenants, conditions, and agreements herein expressed. The Gross Rentable Area of the Building is projected to be 135,000 square feet, subject to final determination being made pursuant to Section 4.03.
ARTICLE 4.00 RENT
4.01 Basic Rent
The Tenant shall pay to the Landlord as annual Basic Rent for the Leased Premises yearly and every year during the first ten years of the Term, without any deduction, abatement, set-off or compensation whatsoever, the Basic Rent determined in accordance with Schedule “D” hereof. …
4.02 Additional Rent
The Tenant shall also pay to the Landlord yearly and every year during the Term as rent the aggregate of the Costs of Operation and all other items of Additional Rent…
4.03 Determination of Gross Rentable Area
(a) The Gross Rentable Area of the Building shall be conclusively deemed to be the area of the Building, expressed in square feet, set out in a certificate of the Landlord’s architect.
SCHEDULE “D” INITIAL TERM RENT
The Basic Rent payable by the Tenant for the Term subject to increases as provided for in the Lease shall be the sum of $16.35 per square foot for the Gross Rentable Area of the Building per year.
D. Positions of the Parties
1. Southlake
19Southlake maintains that the GRA is equivalent to “Total Rentable Area” as referenced in the 1996 BOMA Standard,4 which is 129,535 square feet. Alternatively, Southlake submits, the GRA is the projected area in the lease of 135,000 square feet.
2. Beswick
20Beswick submits that, the intent of the lease was that the entire building’s square footage would be included in the GRA. It submits that the GRA is equivalent to the “Gross Building Area” under the 1996 BOMA Standard, which is is 171,894 square feet.
21The difference between Southlake’s position and Beswick’s position is 42,359 square feet. This difference is attributable to the areas of the major vertical penetrations, the underground parking level of the MAB and most of the Penthouse or 7th floor. Beswick submits that there is no basis to make any of these exclusions given the intention of the parties as expressed in the lease.
E. The Law – The principles of contractual interpretation
22The principles for interpreting commercial contracts were summarized by the Court of Appeal in Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205. The Court adopted the reasoning of the trial judge:
24Counsel accept that the application judge correctly outlined the principles of contractual interpretation applicable in the circumstances of this case. I agree. Broadly stated -- without reproducing in full the relevant passages from her reasons (paras. 29-34) in full -- she held that a commercial contract is to be interpreted,
(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;
(b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the "cardinal presumption" that they have intended what they have said;
(c) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; and (to the extent there is any ambiguity in the contract),
(d) in a fashion that accords with sound commercial principles and good business sense, and that avoid a commercial absurdity. [Footnotes omitted]
23What evidence may be properly considered by the court as part of the “factual matrix” or surrounding circumstances was recently addressed by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53:
47Regarding the first development, the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning:
No contracts are made in a vacuum: there is always a setting in which they have to be placed. . . . In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.
48The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement. As stated by Lord Hoffmann in Investors Compensation Scheme Ltd. v. West Bromwich Building Society:
The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.
57While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement. The goal of examining such evidence is to deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract. While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement.
58The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case to case. It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution of the contract, that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, in the words of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” Whether something was or reasonably ought to have been within the common knowledge of the parties at the time of execution of the contract is a question of fact. [Emphasis added.]
(c) Considering the Surrounding Circumstances Does Not Offend the Parol Evidence Rule
59It is necessary to say a word about consideration of the surrounding circumstances and the parol evidence rule. The parol evidence rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing. To this end, the rule precludes, among other things, evidence of the subjective intentions of the parties. The purpose of the parol evidence rule is primarily to achieve finality and certainty in contractual obligations, and secondarily to hamper a party’s ability to use fabricated or unreliable evidence to attack a written contract.
60The parol evidence rule does not apply to preclude evidence of the surrounding circumstances. Such evidence is consistent with the objectives of finality and certainty because it is used as an interpretive aid for determining the meaning of the written words chosen by the parties, not to change or overrule the meaning of those words. The surrounding circumstances are facts known or facts that reasonably ought to have been known to both parties at or before the date of contracting; therefore, the concern of unreliability does not arise. [Emphasis added, footnotes omitted.]
24I would summarize the principles recognized by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp. regarding the surrounding circumstances, as follows:
The court may consider objective evidence of the background facts that was or reasonably ought to have been known by both parties at or before the date of contracting; and
The court may not consider evidence of the subjective intentions of the parties or evidence outside the words of the written contract that would add to, subtract from, vary or contradict the contract.
F. The Evidence
25Apart from the two experts, there were three witnesses in this trial. Southlake called Paul Clarry, who was and remains a vice-president at Southlake. He was responsible for overseeing the development of the MAB on behalf of the hospital. Beswick called Daniel Carriere, the chief executive officer and president of Southlake from 2004 to 2011, and David Beswick, who represented the defendant throughout project.
26Each party also called their own expert who produced measurements of the MAB, which are not in dispute, and who provided opinions as to what the “Gross Rentable Area” is, considering the BOMA Standard.
1. The surrounding circumstances known to the parties at the time they signed the lease
27On April 21, 2004, the joint venture agreement (the “JVA”) was executed. It included the following relevant paragraphs:
Article 1.00 - INTERPRETATION
1.01 Unless the context otherwise requires, the terms defined in this agreement shall for all purposes have the meaning set forth below:
(p) “Medical Arts Building” means an office building to be constructed on the Property having an area of approximately 75,000 net rentable square feet, an underground parking garage, outdoor parking areas, driveways, loading areas and related facilities for the Principal Use and the Ancillary Use all to be constructed on the Property.
Article 7.00 – HOSPITAL LEASE
7.01 The Hospital agrees to lease all or any part or parts of three (3) contiguous floors of the Medical Arts Building or 35,000 square feet whichever is greater… The Hospital and Beswick agree that such lease shall include the following rights:
(h) The right of the Hospital to the exclusive use of such number of parking spaces on the Property at no additional charge consistent with parking space allocations given to anchor tenants.
28The JVA reflects the understanding between the parties that the MBA would be a multitenant building with Southlake as anchor tenant and that Southlake could lease the remainder of the MAB to other tenants. The JVA does not define “net rentable square feet”. It does not state the total size of the MBA.
29David Beswick’s evidence was that the 75,000 net rentable area referred to in the JVA did not include parking and that the total estimated size of the MBA at that time was 110,000 to 120,000 square feet, including underground parking of 26,000 square feet. While I do not have evidence that these facts were known by both parties at or before the time the lease was signed, I do not believe that they are contentious.
30Once the JVA was executed the parties cooperated in preparing the project documents and obtaining municipal approvals required to start construction. The chronology of events may be summarized as follows:
June 2004 - application for initial zoning change and preliminary site plan approval;
November 15, 2004 - application for Amendment to Site Plan Approval considered at meeting of the Committee of the Whole of the Town of Newmarket;
November 22, 2004 - Town of Newmarket Council adopted certain recommendations, including approval in principle of the Application for Amendment to Site Plan Approval and zoning bylaw amendment;
March 2005 - building design finalized and advanced architectural drawings prepared;
April/May 2005 (approx.) - application for final site plan approval submitted;
May/June 2005 (approx.) - application for building permits for MAB, parking garage and pedestrian bridge submitted to the Town of Newmarket;
July 12, 2005 - architectural drawings issued for tender by construction companies;
August 2005 (approx.) - building permits issued by the Town of Newmarket;
September 14, 2005 - lease signed;
September 15, 2005 - construction of the MAB begins.
31The application for site plan approval approved in principal on November 22, 2004 was for a 6-storey MAB having a gross floor area of 135,000 square feet. The gross floor area determined the number of parking spaces that were required.
32In December 2004 and January 2005, discussions took place between the parties regarding the terms of the lease. By this time it was understood between the parties that Southlake would rent the whole MAB. The terms of the lease were agreed to in principal at a meeting between the parties on January 10, 2005. A square-foot rent amount was agreed upon for a “gross lease”.
33The July 12, 2005, drawings that were issued for tender include a calculation of “Gross Floor Area” on Drawing A1.1. The Gross Floor Area is the total area of the six floors of the MAB and equals 135,069.96 square feet. The calculation of Gross Floor Area excludes the basement area (26,221.24 square feet) and the mechanical penthouse (3,563 square feet). The Total Area, including the basement area and mechanical penthouse is 164,854.70.
34The drawings that were issued for construction on September 21, 2005 contain exactly the same calculations that appear on the July 12, 2005 tender drawings.
35Apart from the evidence regarding the prepared documents and drawings, I found the evidence of the non-expert witnesses of little assistance. Given that they were attempting to recall events that are approximately ten-years old, their recollection was, understandably, poor. In the absence of independent corroborating evidence (documents that were tendered), it was very difficult to find “objective evidence of the background facts that was, or reasonably ought to have been, known by both parties at or before the date of contracting,” as it pertained to their understanding of “Gross Rentable Area,” that did not “add to, subtract from, vary, or contradict” the written lease.
2. The Experts
36Two experts gave evidence in this trial. Beswick called the architect of the MAB, Roland Rom Colthoff. Southlake called David Fingret, a founder, owner and president of Extreme Measures, a business that specializes in “as-built” measurements. Both experts were recognized as being qualified to provide opinions on the measurement of buildings. Both experts measured the MBA following the BOMA Standard and calculated certain square-foot areas. Their measurements are not in dispute. The parties agreed to accept the midpoint of the measurements made by each of their experts.
37The experts also provided evidence of their respective interpretations of the BOMA Standard as it applied to this case and how “Gross Rentable Area” as used in the lease is to be measured. The BOMA Standard sets out detailed instructions for measuring and calculating specifically defined areas, including: “Gross Building Area”, “Floor Rentable Area”, “Basic Rentable Area” and “Rentable Area” but not “Gross Rentable Area”.
38The BOMA Standard Method for Measuring Floor Area in Office Buildings is an internationally recognized standard for calculating the area of office buildings. It has been approved by the American National Standards Institute (ANSI). It is a voluntary standard. A statement that appears on the copyright page at the beginning of the 1996 publication reads:
BOMA International has developed this publication as a service to the office building industry to the public. Use of this publication is voluntary and should be undertaken after an independent review of the applicable facts and circumstances of the particular projects.
39“Gross Rentable Area” does not appear in the BOMA Standard Method for Measuring Floor Area in Office Buildings.
G. Analysis
40As it pertains to the Basic Rent and the Gross Rentable Area of the Building, I read the lease as follows:
Basic Rent is defined in paragraph 1.01(c) as specified in Section 4.01.
Section 4.01 states Basic Rent is determined in accordance with Schedule “D”.
Schedule “D” states the Basic Rent payable by the Tenant … shall be the sum of $16.35 per square foot for the Gross Rentable Area.
“Gross Rentable Area” is defined in 1.01(o) as the area, expressed in square feet, set out in Section 2.01 subject to a final determination made pursuant to Section 4.03.
Section 2.01 states that the Gross Rentable Area of the Building is projected to be 135,000 square feet, subject to final determination being made pursuant to Section 4.03.
Section 4.03(a) states that the Gross Rentable Area of the Building shall be conclusively deemed to be the area of the Building, expressed in square feet, set out in a certificate of the Landlord’s architect.
41Unfortunately, apart from the sections above, the lease offers little information about the GRA. The only other references to GRA contained in the lease are in the context of abatement and alterations and are of little or no assistance in interpreting the meaning of GRA.
42To address the issue in this case, what is the square footage of the MAB and quantum of basic rent payable from October 1, 2013 onward, two distinct questions must be answered:
What is to be measured?
What is its measurement?
43Having regard to the principal that a lease is to be interpreted “as a whole, in a manner that gives meaning to all of its terms” and the cardinal presumption that the parties “intended what they have said” (Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust at para. 24), I do not interpret the lease as leaving both of these questions to be finally and conclusively determined by the architect under section 4.03(a) of the lease. For the same reason, I reject the experts reliance upon the BOMA Standard for determining the parties intention with respect to the meaning of the GRA. The parties chose not to reference or adopt the Standard in the lease and did not adopt any of the defined words from the Standard.
44As the parties agreed on the projected measurement of the Gross Rentable Area, as stated in section 2.01, it was necessary that they knew what was being measured for the projected measurement to be meaningful, to “avoid a commercial absurdity.” They had to have known the meaning of the GRA even if that meaning was not explicitly included in the lease.
45Relying upon the evidence of the surrounding circumstances, the only evidence I have of background facts available to both parties at the time of the signing of the lease that is consistent with the wording of the lease is the Gross Floor Area of 135,000, as it was calculated for the site plan application and used in the drawings for tender, the permit and construction. That surrounding circumstance, that common knowledge of an objective fact, leads me to find that the parties intended the GRA to be the Gross Floor Area as it had been calculated by the architect.
46In reaching this conclusion, I have considered the position argued by Beswick that the intent of the lease was that the entire building square footage would be included in the GRA. Were this the case, the parties would have adopted a projection that reflected the architects calculation of the entire building square footage. Beswick’s position is inconsistent with the written terms of the lease and there is no objective evidence that this was the common understanding of the parties at the time the lease was signed.
47I also reject the suggestion that what is to be measured was subject to a final determination by the architect. The interpretation of the lease “that accords with sound commercial principles and good business sense” is that the parties understood and agreed that the projected measurement of the Gross Rentable Area/Gross Floor Area required final determination by the architect. The architect was not to provide a final determination of what was to be measured, but what the final measurement was, the “as-built” measurement, as Mr. Rom Colthoff explained it. Before being built, the GRA was projected to be 135,000. After being built the GRA may very well have changed, as a result of agreed upon change orders, or simply as a result of the imprecision and adjustments made by the builders. Hence the need for final determination by the architect.
48Having found that the GRA was to be the Gross Floor Area as calculated by the architect, I would also find that the appropriate measurement may be calculated as follows:
Gross Building Area
EM
RAW
1st FLOOR
20,140
19,481
2nd FLOOR
23,460
23,607
3rd FLOOR
23,460
23,604
4th FLOOR
23,460
23,607
5th FLOOR
23,080
23,227
6th FLOOR
22,611
22,600
PENTHOUSE
8,621
8,420
PARKING
less MECHANICAL PENTHOUSE
-3,563
-3,563
TOTAL
141,269
144,546
MIDPOINT:
142,907.5
49I have used the Gross Building Area measurements excluding the parking area and the mechanical penthouse as these areas were not included in the original projection of 135,000. I have, however, included the balance of the penthouse as this was an addition to the original plan. In accordance with the agreement of the parties, I have taken the midpoint.
H. Conclusion
50I find the Gross Rentable Area of the Building to be 142,907.5 square feet. I will leave it to the parties to calculate the quantum of basic rent payable from October 1, 2013 onward.
51If the parties are unable to agree on costs. I shall receive brief written submissions within 14 days from Southlake and 21 days from Beswick.
J. C. Corkery J.
Date: September 3, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Southlake Regional Health Centre
Plaintiff
– and –
Beswick Group Properties Inc.
Defendant
REASONS FOR JUDGMENT
J.C. Corkery J.
Released: September 3, 2015
Although “Total Rentable Area” is not specifically defined in the BOMA standard, it is very clear that it not to be confused or equated with “Gross Building Area”, which is defined. Indeed, these are the two areas that represent the opposed positions of the parties.
3As stated orally in court, this motion was decided in favour of Beswick for the following reasons:
- I disagree with Southlake's position that the issues to be tried relate to the parties’ intentions and expectations from 2005 forward as they may relate to a determination of the gross rentable area of the building. Nowhere in its initial application did Southlake raise the validity of the lease as an issue, and only after receiving the report of Beswick's expert, RAW Designs, did it decide that the high number assigned to "gross rentable area" by RAW Designs raised an issue as to the parties’ intentions with respect to the lease. The lease contains a mechanism for a determination of the gross rentable area. The dispute in this case is not centered on the parties' intentions, but rather a disagreement over the methodology used by RAW Designs to calculate such. There is no ambiguity in the lease that would trigger the parol evidence rule to be invoked to require evidence of the parties' negotiations and conduct following the signing of the lease or its subsequent amendments. This is highlighted by the fact that Southlake had applied for a final order in its application heard on February 20, 2014 on the strength of the evidence then existing, including its own expert report. It is a case to be tried primarily on the strength of expert reports.
On the hearing of an Application the presiding judge may order that the whole Application or any issue proceed to trial and give such directions as are just.
Footnotes
- An example of such confusion is found in the architects own report dated 2 May 2014 (filed as Ex. 1 tab 7) in which he states at the top of page 2, “Note: the term gross rentable area is not a BOMA specific term. However, we interpret this to be equivalent to the Total Rentable Area of the building or in this instance Gross Building Area.”
- In her decision reported at Southlake Regional Health Centre v. Beswick Group Properties Inc., 2014 ONSC 5038, Healey J. states:
- Rule 38.10 (1)(b) reads:
- Unfortunately, the 1996 BOMA Standard does not specifically define “Total Rentable Area”. The term appears in the final column (Column 20) of the example “Global Summary of Areas” and is shown as the total of “Office Area” and “Store Area” (Columns 18+19).