Court File and Parties
COURT FILE NO.: C-629-16 DATE: 2017/03/07 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: 2373322 ONTARIO INC., Applicant AND: PAUL NOLIS and CATHY NOLIS, Respondents
BEFORE: The Honourable Justice D.A. Broad
COUNSEL: Robert Lanteigne, for the Applicant Respondents – self-represented
HEARD: February 7, 2017
REASONS FOR DECISION
1The application concerns a dispute between parties to a commercial lease over the obligation of the tenant to pay what the parties have characterized as “common area maintenance” charges (“CAM charges”) under the lease, as amended.
Background
2The respondents (the “landlords”) are the owners of a commercial building with multiple tenants at a property municipally known as 355 Erb Street, Waterloo, Ontario (the “building”). By lease dated October 17, 2005 (the “original lease”) the landlords leased a commercial unit comprising approximately 1800 sq. ft. (the “premises”) to the previous tenant Baker’s Cove Seafood Restaurant Inc. (the “previous tenant”) for a five year term commencing on September 1, 2006. The landlords and the previous tenant entered into a brief extension agreement to the lease extending the term to August 31, 2016 with a revised base rent, with all other terms and conditions in the lease to remain the same.
32373322 Ontario Inc. (the “tenant”), the sole shareholder, director and officer of which is Gloria Ringwood, purchased the business of the previous tenant effective October 1, 2013. The landlords and the tenant entered into an “Amendment of Lease” agreement on July 5, 2013 (the “amendment agreement”). The amendment agreement purported to amend certain sections and paragraphs of the original lease. The term of the tenancy was stated to be from October 1, 2013 to September 30, 2018 subject to a right of the tenant to renew the lease, if not in default, for two additional terms of five (5) years each, on the same terms, save for the rent which would be subject to negotiation.
4The dispute between the parties relates, in part, to the effect, if any, of the amendment agreement on the nature and scope of the CAM charges which the tenant is obliged to pay. The tenant takes the position that the amendment agreement changed the definition of “rent” in the original lease to exclude “additional rent” (being CAM charges) and reduced the number of items of expense which the landlord could pass on to the tenant as additional rent.
5The landlords take the position that the amendment agreement did not have the effect of excluding “additional rent” from the definition of “rent” and did not reduce the types expenses for which they were entitled to charge the tenant as additional rent (or CAM charges), but rather “additional rent” continues to include the tenant’s proportionate share of all costs and expenses incurred by them in maintaining, operating, cleaning, and insuring the use of 1800 sq. ft. of space being leased, and in repairing the property, excluding capital repairs and repairs to the HVAC unit, which were specifically made the responsibility of the landlords by the amendment agreement.
6The tenant acknowledges that it did not pay any additional rent between the commencement of the revised term on October 1, 2013 and February 23, 2016. It says that the landlords did not advise it of the amounts required to be paid for additional rent, nor did they provide any supporting documentation to allow the tenant to accurately estimate or calculate additional rent payment under the lease. Moreover the tenant says that the landlords never demanded payment of additional rent until February 23, 2016, when they demanded arrears of additional rent and payment of additional rent payments going forward.
Positions of the Parties
7The tenant takes the position that the landlords are prevented from enforcing payment of arrears of additional rent (that is prior to its demand on February 23, 2016) upon the following bases:
(a) application of the doctrine of promissory estoppel;
(b) application of the doctrine of waiver;
(c) the landlords’ failure to fulfill a condition precedent to entitlement to additional rent; and
(d) the claim is statute-barred under the Limitations Act, 2002 S.O. 2002, c. 24 Sch. B, on the basis that the Real Property Limitations Act, R.S.O. 1990, c. L.15 (“RPLA”) does not apply, as additional rent under the amended lease does not come within the definition of “rent” for the purposes of the RPLA.
8The landlords submit that the additional rent (CAM charges) which it has charged to the tenant are due and owing under the original lease, as amended, and that they are not disentitled from collecting the arrears of additional rent and on a going-forward basis on the bases advanced by the tenant.
The Application And Process To Date
9The tenant claims the following relief in its Notice of Application:
(a) an interim order allowing it to pay the amount of $23,489.75 into court until the court orders such funds to be released;
(b) an interim order preventing the landlords from exercising distress, re-entry, eviction, termination of tenancy or any other landlord remedy affecting the premises unless subsequently authorized by the court;
(c) an interim order preventing the landlords from taking any other steps to interfere with the tenant’s business operations, unless and until subsequently authorized by the court; and
(d) an order interpreting the terms of the lease in clarifying the amounts owing under section 2(4) thereof comprising CAM charges.
10The tenant filed three affidavits in support of its application including the affidavit of Jean Pekurar, a law clerk in the office of the lawyer for the tenant sworn June 10, 2016, a supplementary affidavit of Jean Pekurar sworn June 15, 2016, and the affidavit of Gloria Ringwood sworn August 15, 2016.
11The applicant filed a Factum dated August 16, 2016 as well as a Book of Authorities.
12The landlords did not deliver any affidavit material in response to the application.
13On the initial return date of the application before Justice Braid on June 15, 2016, the landlords were not in attendance and the matter was put over to June 16, 2016 on terms that the landlords would take no steps there before another judge hears the matter. Although the landlords were not in attendance, they had provided to counsel for the tenant a tabbed series of documents comprising what appeared to be emails or communications between the landlord Paul Nolis and counsel for the tenant, which were filed by counsel for the tenant.
14On June 16, 2016 the landlords were not in attendance and Justice Sloan made an order that the applicant tenant pay into court in the sum of $23,489, that the landlords shall not exercise any distress, re-entry, eviction, termination of tenancy, or any other landlord remedy relating to the premises or take any other measures to interfere with the applicant’s business interests or operations at the premises unless subsequently authorized by the court, that the landlords pay costs in the amount of $1500 to be deducted from the amount to be paid into court and that the landlords produce the source documents and/or estimates used by them to calculate the additional rent for the period October 1, 2013 to June 1, 2016, on or before August 31, 2016.
15The landlords filed a one page handwritten document entitled “Factum” accompanied by:
(a) a 46 page typed document called “the Respondents’ Legal Position”;
(b) an 8 page typed document entitled “Supplement to Landlords’ Response”; and;
(c) various additional documents comprising copies of the original lease and the amendment agreement, communications between Mr. Nolis and the lawyer for the tenant, communications between Paul Nolis and Ms. Ringwood, a letter from five tenants of the building, including the tenant in this proceeding to the landlords, a letter dated September 14, 2016 from a lawyer acting for the landlords to the lawyer for the tenant, a letter dated September 22, 2016 from the lawyer for the tenant to Mr. Nolis and an email from Mr. Nolis to the lawyer for the tenant dated September 21, 2016.
16It is apparent from the foregoing that the only evidence before the court, under oath or affirmation, is comprised of the two affidavits of Jean Pekurar and the affidavit of Gloria Ringwood, and the exhibits appended to those affidavits. No evidence was filed by the landlords in response to the application.
Provisions Of The Original Lease And Amendment Agreement In Issue
17Paragraph 2 (1) of the original lease provided as follows:
“Rent means the amounts payable by the Tenant to the Landlord pursuant to this Section and includes Additional Rent.”
18At paragraph 2 (1) of the amendment agreement the words “and includes Additional Rent” were struck out by hand and initialed by the signatories. As a result, the paragraph provides as follows:
“Rent means the amounts payable by the Tenant to the Landlord pursuant to this Section.”
19Paragraph 2 (4) of the original lease, in its preamble, provided as follows:
“the Tenant covenants to pay its proportionate share of all costs and expenses incurred by the landlord in maintaining, operating, cleaning, insuring and repairing the property, and without limiting the generality of the foregoing, such costs and expenses shall include the following expenses related to the Premises as Additional Rent:”
20Following the preamble are six subparagraphs (a) through (f). Subparagraphs (a) to (e) list specific items of expense and subparagraph (f) states “all other charges, impositions, costs and expenses of every nature and kind whatsoever.”
21At paragraph 2 (4) of the amendment agreement the preamble is unchanged and includes the phrase “and without limiting the generality of the foregoing, such costs and expenses shall include the following expenses related to the Premises as Additional Rent:” The following phrase is set forth immediately following the preamble:
“a) the foregoing (sic) is the list of additional charges related to the premises”.
22Four subparagraphs are listed at (i) to (iv). Subparagraph (i) is the same as subparagraph (a) in the original lease reading “snow, garbage and trash removal”, (ii) is the same as (b) in the original lease reading “landscaping and planting”, (iii) is the same as (d) in the original lease reading “the realty taxes, assessments, rates, charged (sic) and duties levied or assessed against the property (save any tax on the personal income of the Landlord).”
23Subparagraphs (c) and (e) in the original lease are not included in the list at paragraph 2(4) of the amendment agreement. Subparagraph (c) stated: “heating, ventilating and air conditioning, and providing hot and cold water and other utilities and services to and operating the common area of the property, and maintaining and repairing the machinery and equipment for such utilities and services”. Subparagraph (e) stated “insuring the property and such other insurance as the Landlord will obtain against public liability, property damages, loss of rental income and other risks”.
24The following subparagraph was added in the amendment agreement “other charges, impositions, costs and expenses that are reasonable and the tenant finds acceptable.”
25Paragraph 6 in the original lease under the heading “Repair and Maintenance” was amended in the amendment agreement to add subparagraph 6 (1) (b) which provides as follows:
“the landlord will solely be responsible to effect all capital repairs and replacement at the landlord’s sole cost. These repairs will be completed in a timely and good and workmanlike manner and shall include repair and replacement of all heating, ventilation, air-conditioning, structural and roof, but not limited to these items. [The following being inserted by hand and initialed by the signatories] Tenant will have a maintenance agreement [illegible] contract for the HVAC unit, for annual maintenance requirements.”
26Paragraph 2 (5) of the original lease was not amended by the amendment agreement, and provides as follows:
“5) Additional Rent shall be payable in monthly instalments in advance on the same dates stipulated for payment of Rent in Section 2(2) and the Landlord shall at least once each year provide the Tenant with a statement providing such information as may be required to calculate accurately the amounts payable by the Tenant as additional rent:
(a) prior to the first such statement being delivered the payments of Additional Rent shall be based on the Landlord’s estimate of the expenses chargeable to the Tenant;
(b) in the event that any such statement indicates that the amounts paid by the Tenant for additional rent are either more or less than the amount required pursuant to the statement than an adjusting statement shall be delivered within 120 days;
i) and if the Tenant has overpaid in respect of Additional Rent the adjustment may be made by way of a separate payment from the Landlord to the Tenant.
27Paragraph 2 (8) of the original lease, which was not amended by the amendment agreement, provides:
“8) the Tenant acknowledges and agrees that the payments of rent and additional rent provided for in this lease shall be made without deduction for any reason whatsoever unless expressly allowed by the terms of this lease or agreed to by the Landlord in writing.”
28Subparagraph 10(6) (a) of the original lease, which was not amended by the amendment agreement, provides:
“a) no covenant, term or condition of this Lease shall be deemed to have been waived by the Landlord unless the waiver is in writing and signed by the Landlord.”
29Paragraph 10 (1) under the heading “Acts of Default and Landlord’s Remedies” distinguishes between a failure by the tenant to pay Rent for a period of 15 consecutive days and a breach by the tenant of its other covenants or a failure to perform any of its other obligations under the Lease. Failure to pay Rent for period of 15 consecutive days is stated to constitute an “Act of Default” regardless of whether demand for payment has been made or not, whereas a breach of any other covenant or obligation requires the landlord to give notice to the tenant of the default and the steps required to remedy it. An “Act of Default” shall only occur if the tenant fails to correct the default as required by the notice.
Guiding Principles Re Contractual Interpretation
30The general principles governing the interpretation of contracts are summarized at Canadian Encyclopedic Digest – Contracts, at para. 552 as follows (citations omitted):
552 The objective of interpreting a contract is to discover and give effect to the parties' true intention as expressed in the written document as a whole at the time the contract was made. In the absence of ambiguity, the plain, ordinary, popular, natural, or literal meaning of the words, read 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 inconsistency with the rest of the contract. Contractual interpretation is essentially a search for the objective meaning of language, absent proof that all parties mutually interpreted the contract in a way that may not have been apparent to an ordinary person. Thus, while modern courts tend to interpret contractual language contextually, in accordance with the surrounding circumstances of the agreement, and consistent with the reasonable understanding and expectations of the parties, interpretation of a contract must be objectively based. Generally, evidence of unexpressed (subjective) intention of the parties is not admissible.
Inclusion Of Insurance And HVAC Costs In Additional Rent
31The tenant argues that when comparing the wording of the original lease to the amendment agreement it must be concluded that the lease, as amended, does not allow the landlords to request reimbursement of their costs for insurance, HVAC services, or capital repairs and replacements or other additional rent items which are not specifically listed at subparagraph 2 (4) (i) to (iii), subject to subparagraph (iv) which provides that the tenant may agree to pay other charges if it finds them acceptable.
32The tenant’s position is based on the proposition that subparagraphs 2(4) (i) to (iv) is to be regarded as an exhaustive list of expense items which may be passed on by the landlords to the tenant as additional rent. The effect of this position is that words “the tenant covenants to pay its proportionate share of all costs and expenses incurred by the landlord in maintaining, operating, cleaning, and insuring the use of 1800 sp. ft. of space being leased and repairing the property” (emphasis added) in the preamble are to be disregarded or limited.
33It is a well-established principle of contractual interpretation that, where possible, effect must be given to all terms of the contract and none are to be rejected as surplusage or as having no meaning.
34In my view the express words of paragraph 2 (4) of the amendment agreement clearly indicate an intention by the parties that the tenant is obliged to pay its proportionate share of all costs and expenses incurred by the landlord in maintaining, operating, cleaning, insuring and repairing the property. This conclusion derives from the inclusion of the phrase “without limiting the generality of the foregoing” prior to the phrase “such costs and expenses shall include the following expenses.” Had the parties intended to provide for an all-inclusive list of expenses which would comprise additional rent they would have removed the phrase “without limiting the generality of the foregoing” and set forth a list of expenses expressly stated to be exhaustive.
35The parties did, at subparagraph 6 (1)(b) of the amendment agreement, specifically place on the Landlord responsibility for effecting all capital repairs and replacements, including, but not limited to all heating, ventilation, air-conditioning, structural and roof repairs, provided that the tenant would be required to have a maintenance agreement for annual maintenance requirements of the HVAC unit. It is clear that, in relation to capital repairs and responsibility for repair and maintenance of the HVAC unit, the parties intended the assignments of responsibility to the landlords and the tenant for capital repairs and repairs to and maintenance of the HVAC unit, expressed in subparagraph 6 (1)(b), to prevail over the general obligation on the tenant in the preamble to paragraph 2 (4).
36The tenant’s covenant, in the original lease, to pay its proportionate share of all costs and expenses incurred by the landlord in insuring the property was unaffected by the amendment agreement.
37Mr. Nolis, in submissions, acknowledged that the landlords have no intention of including costs associated with the HVAC unit in additional rent, provided that the tenant has the obligation to contract with a third party for annual maintenance of the unit. In my view, this is consistent with subparagraph 6 (1)(b) of the amendment agreement.
Inclusion Of Additional Rent In The Definition Of Rent
38The tenant argues that, by striking out the words “and includes Additional Rent” at paragraph 2(1), the parties evidenced an intention to exclude additional rent from the definition of “rent” for the purposes of the lease.
39In my view, the difficulty with this argument is that paragraph 2(1) expressly includes as “rent” all amounts payable by the tenant to the landlord pursuant to “this section” being section 2. The obligation on the tenant to pay its proportionate share of costs and expenses incurred by the Landlord as additional rent is pursuant to section 2, at paragraph (4). Had the parties intended to exclude “additional rent” from “rent” they would have added the phrase “except Additional Rent.” The exclusion of the phrase “and includes Additional Rent” is more consistent with a mutual agreement by the parties that the language was surplusage and could be eliminated without affecting the meaning of the sentence.
40In my view the amendment agreement did not have the effect of excluding additional rent from rent for the purposes of the lease.
Do The Doctrines Of Promissory Estoppel And Waiver Bar The Landlords From Recovering Additional Rent?
41The tenant argues that one or both of the doctrines of promissory estoppel and waiver are applicable to bar the landlords from claiming additional rent for any period prior to the notice delivered in February, 2016.
42The principles underlying the doctrine of promissory estoppel were summarized by Sopinka, J. in the case of Maracle v. Travellers Indemnity Co. of Canada (1991), 80 D.L.R. (4th) 65 (S.C.C.) at para 13, as follows:
The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. In John Burrows Ltd. v. Subsurface Surveys Ltd., [1968] S.C.R. 607, 68 D.L.R. (2d) 354, Ritchie J. stated [at p. 615, S.C.R]:
It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.
This passage was cited with approval by McIntyre J. in Engineered Homes Ltd. v. Mason, [1983] 1 S.C.R. 641, 51 B.C.L.R. 273, 49 C.B.R. (N.S.) 257, 47 N.R. 379, 146 D.L.R. (3d) 577, at p. 647 [S.C.R.]. McIntyre J. stated that the promise must be unambiguous but could be inferred from circumstances.
43The only evidence on the record in the case at bar relating to the question of whether the landlords, by words or conduct, made a promise or assurance that their strict rights under the lease would not be enforced, intended by them to affect their legal relationship with, and to be acted on by, the tenant, is the statement by Ms. Ringwood, at paragraph 22 of her affidavit that when each year finished and no statements or adjusting statements were received from the landlords, she believed that they had waived their ability to collect of the additional rent for that year.
44The onus is on the tenant to establish that the landlords made a representation of this nature by their conduct, and that their “promise” not to rely upon their strict rights under the lease was unambiguous. In my view, the evidence of the tenant in this case falls short of discharging that onus.
45Moreover there is no evidence that the tenant, acted in reliance on a representation by the landlords that they would not insist on payment of additional rent or in some way changed its position.
46The tenant relies upon the case of Re Med-Chem Health Care Inc., [2000] O.J. No. 4009 (S.C.J.). In that case the tenant Med-Chem was in bankruptcy and the landlord 1166710 Ontario Inc. was in receivership. The landlord and the tenant had the same principal. The evidence indicated that from the inception of the lease to the date of the tenant’s bankruptcy the tenant paid amounts of rent on three leases which were different than specified in the leases themselves. Swinton, J. stated at para. 10 that, having reviewed the evidence, she was satisfied that there was a course of conduct over an extended period that showed an intention by the landlord not to rely on the strict terms of the lease with respect to the amount of the rent, and also reliance by the tenant. Justice Swinton made specific reference to the fact that the landlord company and the tenant company had the same principal (and therefore the same directing mind) and that it was this principal’s personal assistant who instructed the tenant’s controller as to the amounts of rent to be paid.
47In contrast to the situation in Med-Chem, I am not satisfied, on the evidence in this case, that there was a course of conduct that showed an unambiguous intention by the landlords not to rely on the strict terms of the lease coupled with reliance by the tenant.
48As observed by Justice Swinton in Med-Chem at para. 11 the doctrine of waiver is closely connected with the doctrine of promissory estoppel.
49In the case of Saskatchewan River Bungalows Ltd. v. Maritime life Assurance Co., [1994] 2 S.C.R. 490 (S.C.C.) the Supreme Court of Canada stated at para. 19 that “waiver occurs when one party to a contract or to proceedings take steps which amount to foregoing reliance on some known right or defect in the performance of the other party.”
50At para. 20 Major, J., writing for the Court, held:
Waiver will be found only where the evidence demonstrates that the party waving had (1) full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The creation of such a stringent test is justified since no consideration moves from the party in whose favour a waiver operates. An overly broad interpretation of waiver would undermine the requirement of contractual consideration.
51Even if it may be presumed that the landlords in this case had full knowledge of their rights under the lease, there is no evidence of an unequivocal and conscious intention on their part to abandon them. To find that the landlords in this case waived their right to payment of additional rent would represent an overly broad interpretation of the doctrine and would undermine the requirement of contractual consideration.
52It is therefore not necessary to consider whether the tenants are precluded from relying upon the doctrine of waiver by reason of the non-waiver provision in the original lease at subparagraph 10(6)(a).
Are The Landlords Precluded From Collecting Additional Rent By Reason Of Failing To Complete A Condition Precedent?
53The tenant submits that the landlords failed to complete a condition precedent required to become entitled to the additional rent prior to issuance of their demand in February, 2016. It asserts that the landlords had positive duties under para. 2 (5) to, at least once each year, provide the tenant with a statement providing information for the accurate calculation of additional rent and to provide adjusting statements within 120 days.
54The lease does not expressly provide for any consequence to the landlord for failure to provide a statement providing information for calculation of additional rent and adjusting statements. Specifically, there is no provision in the lease which provides that the landlord, by failing to deliver the statements, forfeits the right to recover additional rent. Conversely, there is a specific provision at paragraph 2(8) whereby the tenant acknowledged and agreed that the payments of rent and additional rent provided for in the lease shall be made without any deduction for any reason whatsoever unless expressly allowed by the terms of the lease or agreed to by the landlords in writing (emphasis added).
55It is apparent from the foregoing that the failure of the landlord to deliver a statement setting forth information for calculation of additional rent or to deliver an adjusting statement does not have the effect of relieving the tenant from the obligation to pay additional rent once the statement is provided. However, until the statements are provided by the landlords, as required by the lease, the tenant cannot be considered to be in breach of its obligation to pay additional rent.
56Of course, as with the breach of any covenant in the lease, a breach by the landlords of their obligation to provide the required statements may give rise to a claim for damages by the tenant. I therefore do not accept the tenant’s submission that to allow the landlords to claim additional rent, having not delivered the statements required of them in a timely fashion, would render paragraph 2(5) of the lease meaningless, as the tenant would still have a claim for any damages it may have suffered as a result of the landlords’ breach. However, no claim for damages is asserted in this proceeding, and there is no evidence in the affidavit material that the tenant has suffered any damages as a result of not receiving the required statements from the landlords.
Is The Landlords’ Claim For Additional Rent Statute-Barred, In Whole Or In Part?
57The tenant submits that all or a portion of the landlords’ claim for arrears of additional rent is barred by the Limitations Act, 2002 S.O. 2002 c. 24, Sch. B, which provides for a two year limitation period for bringing action for an injury, loss or damage that occurred as a result of an act or omission. The tenant submits that the Limitations Act, 2002 applies to the landlords’ claim and not the Real Property Limitations Act R.S.O. 1990, c. L.15 (the “RPLA”) as it does not constitute a claim for “rent” under the RPLA.
58It is noted that, pursuant to ss. 2 (1) (a) of the Limitations Act, 2002, that Act applies to any claim to which the RPLA does not apply.
59In the case of Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 69 (S.C.J.) Mew, J. held, at para. 27, that with the enactment of the Limitations Act, the Legislature created a single, comprehensive general limitations law that is to apply to all claims for injury, loss or damage except, in relevant part, when the RPLA specifically applies, and that accordingly, the application of the Limitations Act should be construed broadly and the RPLA narrowly.
60Justice Mew conducted a careful review of the historical and current meanings of “rent” and concluded that “rent” in s. 17 of the RPLA means “the payment due under a lease between a tenant and landlord as compensation for the use of land or premises.”
61S. 17 of the RPLA provides as follows:
- (1) No arrears of rent, or of interest in respect of any sum of money charged upon or payable out of any land or rent, or in respect of any legacy, whether it is or is not charged upon land, or any damages in respect of such arrears of rent or interest, shall be recovered by any distress or action but within six years next after the same respectively has become due, or next after any acknowledgment in writing of the same has been given to the person entitled thereto or the person’s agent, signed by the person by whom the same was payable or that person’s agent. R.S.O. 1990, c. L.15, s. 17 (1).
62None of the cases cited by the tenant in the case at bar, in support of its submission that the landlords’ claim in this case does not constitute “rent”, dealt with claims for common area maintenance charges of the nature claimed by the landlords in this case. The claims under consideration in Pickering Square were for damages for the tenant’s failure to occupy and carry on business at the premises and resulting from the tenant’s failure to restore the premises to the required condition at the end of the lease term. The claims in Bill Co. v. Yellowstone Property Consultants Corp., 2012 ONSC 5116 (S.C.J.) similarly constituted claims for damages. The claim in Coffee Culture Systems Inc. v. Krukowski, 2013 ONSC 1588 (S.C.J.) was by the tenant against the landlord for breach of the lease.
63In Toronto Standard Condominium Corporation No. 1487 v. Market Lofts Inc., 2015 ONSC 1067 (S.C.J.) Perell J. stated at para. 58 “that the parties to a lease described a payment as rent or additional rent is not determinative of whether the charge is a rent charge, and if it is just a contractual charge it will be governed by the Limitations Act, 2002.”
64In contrast to the cases cited by the tenant, common area charges of the nature claimed by the landlords in the present case were found to constitute “rent” for the purpose of the RPLA in the case of Ayerswood Development Corp. v. Western Proresp Inc., 2011 ONSC 1399, at para. 31.
65Although the characterization by the parties of “additional rent” as “rent” in the lease, as amended, is not determinative, I find that the additional rent, constituting “CAM charges” is properly characterized as “payments due under a lease between a tenant and landlord as compensation for the use of land or premises” and therefore constitutes “rent” for the purposes of the RPLA, which provides for a six year limitation period. Conversely, even if my conclusion, as set forth above, that the parties did not intend, by the amendment agreement, to exclude “additional rent” from “rent” under the lease is wrong, the landlords’ claim for additional rent would still constitute “rent” for the purposes of the RPLA.
66Given my finding that the RPLA and not the Limitations Act, 2002 applies, it is not necessary for me to deal with the argument of the tenant that the provision of the lease, as incorporated by the 2011 amendment executed by the previous tenant and the 2013 amendment agreement executed by the tenant, requiring the landlord to provide calculation and adjusting statements constituted a “business agreement” under ss. 22(5) the Limitations Act, 2002 shortening the otherwise-existing limitation periods.
If Any Additional Rent Is Owed, Is It Owed Only From January 1, 2015 Forward?
67Given my findings that the provision of the original lease requiring the landlord to deliver statements and adjusting statements did not constitute a condition precedent nor did it constitute a contractually-varied limitation period, it is not necessary for me to deal with the argument of the tenant that, if any additional rent is owed, it is owed only from January 1, 2015, as its argument in this respect is premised on one of those findings being made.
Disposition
68On the basis of the foregoing, it is ordered as follows:
(a) the respondents Paul Nolis and Cathy Nolis are entitled to recover from the applicant 2373322 Ontario Inc., pursuant to the terms of the lease dated October 17, 2005, as amended by amendment agreement dated July 5, 2013 (the “lease”), in respect premises comprising 1800 sq. ft. (the “premises”), at property municipally described as 355 Erb Street, Waterloo, Ontario (the “property”) the applicant’s proportionate share of all costs and expenses incurred by the respondents in maintaining, operating, cleaning, insuring and repairing the property, excluding only capital repairs and replacement which shall include, without limitation, repair and replacement of all heating, ventilation, air-conditioning, structural and roof elements (“additional rent”) from and after October 1, 2013, less the sum of $23,489 ordered to be paid by the tenant into court to the credit of this action, and all other amounts paid to the date of this order by the applicant to the respondents in respect of additional rent;
(b) the applicant shall pay to the respondents interest on the amount determined to be owing to the respondents in respect of additional rent pursuant to this order in accordance with the terms of the lease, provided that no interest shall be payable referable to any period prior to February 23, 2016;
(c) the full sum paid into court by the applicant pursuant to the order of Justice Sloan June 16, 2016 ($ 23,489, less $1,500 in respect of costs), together with all accrued interest thereon, shall be paid out of court to the respondents;
(d) the respondents shall, within 30 days hereof, prepare a detailed statement of account of all additional rent and interest which they claim to be payable by the applicants pursuant to this order, with supporting documentation (the “landlords’ statement of account”) and submit it to counsel for the applicant;
(e) the applicant shall have 30 days following receipt of the landlords’ statement of account to give written notice to the respondents, with full particulars, of any dispute that it may have to the landlord’s statement of account (the “tenant’s notice of dispute”) which shall specify the amount, if any, which the applicant acknowledges to be owing to the respondents pursuant to this order. In the event that the applicant fails to deliver a tenant’s notice of dispute within 30 days, as aforesaid, the full amount claimed by the respondents shall be paid by the applicant by the end of the said 30 day period;
(f) the respondents shall within 15 days following receipt of a tenant’s notice of dispute deliver to counsel for the applicant a notice specifying whether it accepts or does not accept the tenant’s notice of dispute (the “landlord’s reply notice”), which shall set forth full particulars of amount that they claim to be owing to them by the applicant pursuant to this order;
(g) within 30 days following delivery of the landlord’s reply notice, either the applicant or the respondents may contact the Trial Coordinator at Kitchener in writing to arrange an appointment before me to give directions for a reference to be held before me to determine and settle the amount owing by the applicant to the respondents in respect of additional rent and interest pursuant to this order, provided that the attendance before me for directions need not be held within the said 30 day period. The appointment for directions shall be set by the Trial Coordinator in consultation with counsel for the applicant and the respondents;
(h) in the event that no appointment is arranged to attend before me for directions for a reference within the time set forth above, the parties shall be deemed to have settled the amounts owing by the applicant to the respondents;
(i) paragraphs 2 and 3 Order of Justice Sloan dated June 16, 2017 restricting the plaintiff from exercising distress, re-entry, termination of tenancy or any other landlord remedy or otherwise interfere with the applicant’s business operations at the premises shall remain in effect, provided that in the event that the applicant fails to pay the amount determined to be owing to the respondents pursuant to this order, or the applicant commits any other act of default under the lease, the respondents may move, on notice to the applicant, for an order lifting the said restrictions.
Costs
69The parties are urged to agree upon costs. If they are unable to do so, the respondents may make written submissions as to costs by 4:30 p.m. on April 4, 2017. The applicant shall have until 4:30 p.m. on April 18, 2017 to deliver responding submissions. The submissions shall not exceed three double spaced typed pages. Such written submissions are to be forwarded to me at my chambers at 85 Frederick Street, 7th Floor, Kitchener, Ontario N2H 0A7. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.
D.A. Broad, J.
Date: March 7, 2017