Court File and Parties

COURT FILE NO.: 16-68067 DATE: 2017-04-07 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

743133 ONTARIO INC. Plaintiff – and – UPPER CANADA DISTRICT SCHOOL BOARD Defendant

Counsel: James L. MacGillivray, for the Plaintiff Applicant on this motion. Helmut R. Brodmann, for the Defendant Respondent on this motion

HEARD: 2017-02-28

Reasons for Decision

R.L. Maranger J.

[1] This was a motion brought by the Plaintiff for a summary judgment in the amount of $102,898.22 arising from an alleged breach by the Defendant of its obligation for payment under a lease agreement.

[2] The Defendant relies upon an early termination clause which existed in the original lease between the parties; arguing that the pre-existing early termination clause was carried forward to the lease amending/extension agreement.

[3] In the event the Plaintiff is successful in establishing that the Defendant has breached the lease, the parties have agreed on the amount of rent at issue, the lease also provided for a specified interest rate chargeable on any outstanding rent.

The Law on Summary Judgment Motions

[4] Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 stipulates that:

RULE 20 SUMMARY JUDGMENT

WHERE AVAILABLE

To Plaintiff

20 .01 (1) A plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim. R.R.O. 1990, Reg. 194, r. 20.01 (1) .

(2) The plaintiff may move, without notice, for leave to serve a notice of motion for summary judgment together with the statement of claim, and leave may be given where special urgency is shown, subject to such directions as are just. R.R.O. 1990, Reg. 194, r. 20.01 (2) .

To Defendant

(3) A defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim. R.R.O. 1990, Reg. 194, r. 20.01 (3) .

[5] Rule 20.04 (2.1) provides that:

In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

[6] The Supreme Court of Canada in the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, set out the governing principles to be applied by trial judges respecting the determination of rule 20 summary judgment motions. At paras. 47, 49-51 and 66 Justice Karakatsanis indicated the following:

[49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[50] These principles are interconnected and all speak to whether summary judgment will provide fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost-effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve the dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

[51] Often, concerns about credibility or clarification of the evidence can be addressed by calling oral evidence on the motion itself. However, there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.

[66] On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

Background and Findings of Fact

[7] After considering the affidavits filed, documentary evidence attached thereto, and the factums filed; I make the following findings of fact:

• The Plaintiff, is the owner of a building located in Cornwall, Ontario commonly known as Time Square.
• Walter Boyce is the principal owner of the Plaintiff Corporation, James Boyce is his employee and acts as his representative in managing property issues.
• The Upper Canada District School Board (the Defendant) entered into a lease to rent office space at Time Square for a term of three years and six months. The commencement date set out in the lease was July 1, 2010.
• Section 2.05 of the lease stipulated: the landlord and tenant each have a one -time right of termination (“Right of Termination”) on the second (2nd) anniversary of the commencement date providing that the exercising party is not, and, has not been in default under the terms of this lease.
• July 01, 2012 was the last time in which either party could have exercised the early termination provided for under section 2.05 of the lease. Neither party exercised this right.
• Section 11 of the lease also provided that the Defendant had the option to extend the term of the lease for a further five years on the terms and conditions set out in that section. The Defendant did not exercise this option.
• The lease expired on December 31, 2013. In February 2014 the Plaintiff sent notice to the Defendant that they were in an over holding situation as a result of their continued occupation of the leased premises.
• The parties negotiated a lease amending agreement and extension agreement. The Agreement provided that the lease would be extended three years commencing January 1, 2014 and expiring 31 st of December 2017.
• Section 5 of the initial amending/extension agreement proposed by the representative for the Plaintiff provided: the following sections of the lease shall be deleted: section 2.05, section 11.01.
• Section 2.05 in the original lease was the one time right for an early termination. Section 11.01 was the right to renew the lease.
• The amending/extension agreement ultimately signed by the parties did not contain a section that specifically deleted section 2.05 or section 11.01. The section 5 agreed to simply provided the defendant with an option for renewal at the expiry of the extended term provided for under the new agreement.
• Paragraph C of the preamble to the lease amending/extension agreement states “the parties have agreed to incorporate this lease amending agreement into the lease and to amend the lease as hereinafter more particularly set forth”).
• The lease amending/extension agreement did not specifically contain a right of early termination.
• I find as a fact that Mr. Rene Bourget a representative of the Defendant believed that a right of early to termination existed in the negotiated lease amending/extension agreement. This finding is based on correspondence that he sent to a colleague on the board.
• Based on that belief a notice of early termination was sent to the Plaintiff stipulating that the lease would terminate December 31, 2016.
• The Plaintiff’s representative denies that an early termination section formed part of the new agreement.
• The Plaintiff immediately advised that the notice of termination would be contested and that they would be seeking payment of the balance of the rent owing on the lease.
• The affidavit evidence supports the proposition that the Plaintiff landlord has made reasonable efforts to attempt to mitigate its losses by attempting to release the subject premises.

[8] The facts in this case allow for a finding in favour of the Plaintiff. It is a matter of contract interpretation. The lease amending/extension agreement speaks for itself. There was no right of early termination stipulated therein. The notion that section 2.05 was somehow incorporated into the amending/extension agreement is an interpretation that I find implausible on the facts of this case.

[9] Section 2.05 expired effective July 1, 2012. It was a one-time opportunity to terminate a 3.5 year lease after two years. It was a very specific time sensitive provision. If a similar right was to be available to the parties in the lease amending/extension agreement it would have had to have been stipulated in no uncertain terms, it is simply not the type of provision contained in a commercial lease that could be incorporated by inference.

[10] Therefore, there will be judgment in favour of the Plaintiff for the sum of $102,898.22, plus interest calculated in accordance with the lease from the date of default.

[11] If the parties cannot agree on the issue of costs, I will accept two pages of written argument within 15 days of the release of this decision from the Plaintiff. The Defendant will be allowed seven days thereafter to file their submissions.

Maranger J. Date: April 07, 2017