Court File and Parties

COURT FILE NO.: 17-74085 DATE: 2021-03-08 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: THE RIVERSIDE PROFESSIONAL CENTRE INC. Plaintiff/Moving Party – and – THE OTTAWA HOSPITAL Defendant/Responding Party

Counsel: Joseph Groia and David Sischy, for the Plaintiff/Moving Party David Sherriff-Scott, Lawrence A. Elliot, Karen Perron and Laura E. Robinson, for the Defendant/Responding Party

HEARD: Nov. 24 and 25th, 2020

Reasons for Decision

R. Smith J.

Overview

[1] The Professional Centre has brought a motion for summary judgment asking the court to interpret the parking provisions of the lease to determine if the Hospital has breached the lease and then if so, to award damages and injunctive relief. This case also requires a consideration of the good faith contractual discretion required when administering the parking provisions of the lease.

[2] In 1989, a group of medical doctors entered into two agreements with The Ottawa Hospital (the “Hospital”), a 49-year lease and a related Memorandum of Agreement (the “MOA”). In the MOA the doctors agreed to build a 50,000 square foot medical office building (the “building”) adjacent to the Riverside Hospital. which included expanding parking lot B to 325 parking spaces and the Hospital constructing a shared access road. At that time the Riverside Hospital was a fully functioning hospital but was closed in 1998 and has been used as an outpatient centre since 2004-05. The MOA agreement was signed at the same time as the lease and forms part of the factual matrix when the lease was signed.

[3] The construction of the building, the expansion of parking lot B and the access road were completed in 1991 in accordance with the site plan (attached as “Schedule A” to this Decision). The access road and parking lot B were used by both parties without any dispute from 1991 until about 2015 when a complaint was made about the amount of parking available to the tenants of The Riverside Professional Centre Inc. (the “Professional Centre”).

[4] The Hospital denies that it has breached any of its obligations under the lease, submits that it has exercised its discretion when administering the parking in good faith, and that the Professional Centre has failed to prove that it has suffered any damages caused by the alleged lack of available parking spaces. In addition, the Hospital submits that this is not an appropriate case for summary judgment or for partial summary judgment.

[5] The Professional Centre argues that this is an appropriate case for summary judgment because the facts related to the interpretation of the parking provisions of the lease are largely undisputed and will determine whether any breach has occurred. The issue to be decided is whether the Hospital failed to provide the Professional Centre with the required number of parking spaces in the lot B and if so whether the difficulty some patients and tenants experienced to find parking in lot B have caused there to be a 29% vacancy rate in the building. Alternatively, the Professional Centre submits that partial summary judgment should be granted to determine whether the Hospital has breached the lease by failing to provide the Professional Centre with up to 250 parking spaces and the remaining issues including damages could be determined at a later trial.

Issue #1: Is This an Appropriate Case for a Partial Summary Judgment?

[6] The Court of Appeal has stated that partial summary judgments should be granted rarely. Very recently, on December 10, 2020 in Malik v. Attia, 2020 ONCA 787 at para 62 (released after this matter was heard), Brown J.A. stated that:

When faced with a request to hear a motion for partial summary judgment, a motion judge should make three simple requests of counsel or the parties:

i. Demonstrate that dividing the determination of this case into several parts will prove cheaper for the parties;

ii. Show how partial summary judgment will get the parties’ case in and out of the court system more quickly;

iii. Establish how partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case.

[7] In the circumstances of this case I am not satisfied that dividing the determination of this case into two parts would be cheaper or quicker for the parties. An appeal is likely on the first part and there is also the possibility of on appeal of the second part which would cause further delay. There is also no urgency at present, because the Hospital has currently segregated 250 parking spaces in lot B for the Professional Centre’s use which has solved the parking problem.

[8] As a result, I am not prepared to grant a partial summary judgment. I will first consider whether the issues raised can be determined by way of a summary judgment motion in accordance with the criteria set out by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7 and if so, I will proceed to decide the issues raised.

Issue #2: Is there a genuine issue requiring a trial?

[9] Rule 20.04 of the Rules of Civil Procedure R.R.O., Reg. 194 states that the Court will only grant summary judgment if satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[10] Rule 20.04 (2.1) provides that in determining whether there is a genuine issue requiring a trial, a judge may weigh the evidence, evaluate credibility and draw reasonable inferences from the evidence, unless it is in the interest of justice for such powers to be exercised only at trial.

[11] In Hryniak the Supreme Court stated that on a motion for summary judgment, the judge should first determine if there is a genuine issue requiring a trial without using the fact-finding powers. If there appears to be a genuine issue requiring a trial, then the judge must determine if the need for a trial can be avoided by using the fact-finding powers in Rule 20.04 (2.1) and (2.2).

[12] In Hryniak at paras 49 the Supreme Court stated that there will be no genuine issue requiring a trial where a judge “is able to reach a fair and just determination” on the matter. At para 50 the court further stated 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.

[13] At para 59 of Hryniak the Supreme Court stated that “ What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.”

[14] In Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 the court stated that on a motion for summary judgment it was entitled to assume that the record contained all of the evidence the parties would provide if the matter proceeded to trial.

[15] At para 48 of Hryniak the Supreme Court referred to the Court of Appeal’s statement that summary judgments would most often be appropriate when cases were document driven, with few witnesses and limited contested factual issues.

[16] This summary motion raises the following issues:

a) Did the Hospital breach the lease by failing to allow the Professional Centre to utilize up to 250 parking spaces in lot B?

b) Did the Hospital breach the lease by failing to remit 90% of the total revenue generated from 40 parking spaces each year?

c) Did the Hospital have the right to use and collect the revenue from seven parking spaces in lot B which encroach on the leased lands?

d) Did the Hospital have the right to use the access road running over part of the leased lands without a registered easement?

e) In the event the Hospital has breached the lease, what damages should be awarded?

Did the Hospital breach the lease by failing to allow the Professional Centre to utilize up to 250 parking spaces in lot B?

[17] The Professional Centre alleges that the Hospital deprived it of its entitlement to utilize up to 250 parking spaces in lot B by issuing too many (621) parking passes to Hospital staff, and directing them to park in lot B rather than lot A.

[18] The Hospital denies that it has breached the parking provisions of the lease and states that the Professional Centre has always been provided with “up to” 250 parking spaces in parking lot B, which initially had 325 and now has 385 parking spaces. The spaces in parking lot B have always been shared with Hospital staff on a first come, first served basis. The Hospital submits that the lease does not state that it was required to provide a minimum of 250 parking spaces but rather that any number of parking spaces less than or equal to 250 would meet the parking requirements set out in the lease.

[19] Determining the issue of whether the Hospital breached the lease involves interpreting the parking provisions of the 1989 lease, the Memorandum of Agreement, and the Site Plan attached thereto (schedule “A “ to these Reasons), along with considering the parties’ conduct for the last 28-29 years. The facts related to the above documents and the parties conduct are not disputed other than whether parking lot B was closed for short periods in 2017 and 2018.

[20] The period during which the Hospital is alleged to have failed to provide up to 250 parking spaces or sufficient parking spaces to the Professional Centre is limited to the period between the fall of 2015 until February of 2018 when an attendant was hired to jockey park cars or in any event by August 1st, 2019 when the Hospital installed concrete barriers segregating 250 parking spaces in lot B for the Professional Centre’s use.

[21] The Professional Centre argues that commencing in 2015 the Hospital increased the number of parking passes it gave out to its employees and directed them to park in lot B instead of lot A. This filled up parking lot B so that less than 250 parking spaces were available for the Professional Centre. The Hospital’s evidence is that the number of parking passes issued to hospital staff over this time period remain constant at approximately 621 passes. The Hospital’s evidence in this regard is not contradicted. However, there is some weak evidence that the Hospital had directed its staff to park in lot B to free up parking for its patients in lot A during the period where there was difficulty obtaining parking in lot B.

[22] The interpretation of the parking provisions of the lease is well suited to a summary judgment motion. The factual context and the terms of the lease are not contested nor is there any dispute about the manner the parking in lot B was shared by the Professional Centre and the Hospital employees from 1991 until 2015. In addition, a decision interpreting the parking rights of the parties will largely determine whether the Hospital has breached the parking provisions of the lease.

[23] The evidence is not contested that in 2018, on several occasions patients of the Professional Centre had to wait for between 10 and 20 minutes to enter lot B. The parties disagree on whether there was ever a situation where lot B was closed. The parties have conducted extensive cross-examination on this issue and I am satisfied that I am able to weigh the evidence and draw inferences to make a fair and just determination on the merits to determine the extent of the parking difficulties and whether the delays constitute a breach of the terms of the lease.

[24] As a result, I find that a trial is not required to interpret the parking provisions of the lease or to decide if the lease has been breached. The fact-finding powers in R. 20.04 (2.1) would allow me, without a trial, to make a fair and just determination on whether the delays experienced to find a parking space in 2017 and 2018 constitutes a breach of the lease.

Did the Hospital breach the lease by failing to remit 90% of the total revenue generated from 40 parking spaces?

[25] The lease initially stated that the Professional Centre would be entitled to 40 reserved and designated parking spaces in lot B. The parties never designated the reserved spaces and on December 11, 1991 they amended this provision. The amendment agreement provided that 40 parking spaces would not be designated in lot B and instead the Hospital would remit to the Professional Centre “90% of all revenue generated from the 40 parking spaces and keep 10% as compensation for administering these parking spaces.”

[26] The Professional Centre argues that using the monthly pass method does not include the revenue from daily users who parked in lot B and as such the Hospital has not paid it based on all of the revenue generated from 40 parking spaces.

[27] The Hospital submits that the parties intended that it would pay the Professional Centre 90% of the revenue generated by 40 monthly passes on an annual basis. The parties have used this method of calculating the revenue from 40 parking spaces over the last 28 years and the Professional Centre has not objected to this method until this lawsuit was commenced.

[28] The facts are not contested, and I am satisfied that a trial is not required to determine this issue. The issue is document driven and the facts are not contested. In addition the court’s fact-finding powers may be used to draw the required inferences and make the required findings.

Does the Hospital have the right to use and collect the revenue from seven (7) parking spaces in lot B, and to use the part of the access road which encroaches on the leased lands?

[29] The Professional Centre alleges that the Hospital has received the revenue from seven (7) parking spaces in lot B that are located on part of the leased lands and has also made unauthorized use of the access road which crosses part of the leased lands. In addition, the Professional Centre claims damages for the loss of the revenue from seventeen (17) potential parking spaces, which could have been created on the access road portion of the leased lands.

[30] The Hospital denies that it has made unauthorized use of the access road. It submits that the parties intended that it have an implied easement as it has used the access road together with the Professional Centre for the past 28 years for a common purpose. The access road and approximately 7 parking spaces in lot B located on the leased lands were shown on the original site plan dated June 29, 1989 which was approved by the parties and the City of Ottawa. The site plan clearly indicates that the parties intended that they would both be entitled to use the access road and that the seven (7) parking spaces would be part of lot B and administered by the Hospital.

[31] The issues of whether the Hospital is entitled to keep the revenue from seven (7) parking spaces that are located within the lands leased to the Professional Centre and whether the Hospital is entitled to an easement over the access road that lies within the leased lands do not raise a genuine issue requiring a trial because the facts are not contested. A determination of the parties’ objective intentions on these issues requires a consideration of the lease, the MOA, the site plan and their conduct over the last 28 years.

[32] The request for injunctive relief will also be resolved by deciding the above issues and a trial is not required to decide these issues.

In the event the Hospital has breached the lease in the manner alleged above, what damages should be awarded?

[33] The Professional Centre claims that the Hospital’s failure to provide it with 250 parking spaces in lot B has caused the vacancy rate in its building to increase to 29.55% commencing in 2018 and 2019. It claims that this rate is above a standard vacancy rate of 5% for medical buildings connected to a hospital. The Professional Centre claims damages for the vacancy rate being above 5% as well as the leasing costs it will incur to lease out the unleased space.

[34] The Hospital strongly disputes that there is a standard vacancy rate of 5% for medical buildings in Ottawa that are not connected to a fully functioning hospital. The Hospital also denies that the Professional Centre’s high vacancy rate was caused by a failure to provide “up to 250” parking spaces, but rather submits that the Riverside hospital was closed in 1998 and since 2005 has operated as an outpatient clinic without any overnight patients. This change has removed any advantage for doctors (other than specialists working at the Riverside campus) to locate their offices next door to an ambulatory care centre. This change along with the change to the granting of privileges to the Ottawa Hospital, the termination of many of the leases with doctors who were the original owners/shareholders of the building, and the high rent sought by the Professional Centre have caused the high vacancy rate.

[35] The evidence from the experts is contested as to whether the high vacancy rate experienced by the Professional Centre since 2017 was caused by the lack of 250 available parking spaces for the Professional Centre. This does raise a genuine issue for trial if the fact-finding powers were not available. In this case both parties have conducted very thorough cross examinations on this evidence. In cross-examination the Professional Centre’s expert appraiser agreed that all except one of his comparables were connected to or in very close proximity to fully functioning hospitals in Toronto, which is not the factual situation for this building. In addition, his opinion that there was a standard vacancy rate of 5% for medical office buildings was not based on any industry or trade data, or on any comparable medical buildings located in the city of Ottawa.

[36] I am satisfied that using the fact-finding powers in R 20.04 I can weigh the conflicting expert appraiser’s evidence and draw inferences based on the very effective cross examinations by both counsel to make a fair and just determination on this issue.

Disposition of Issue #2

[37] For the above reasons I find that issues as outlined above do not raise a genuine issue requiring a trial and may be determined on a fair and just basis on a summary judgment motion.

Issue #3: Did the Hospital breach the lease by failing to allow the Professional Centre to utilize “up to” 250 parking spaces in lot B?

Legal Test to Interpret a Contract

[38] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para 55 the Supreme Court stated that in order to interpret the lease, the Court must ascertain the objective intentions of the parties. In Sattva at para 47 the Supreme Court held that the Court “ 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.”

[39] In Sattva the Supreme Court further stated at para 47 that the contract (in this case a lease) should be interpreted in light of its purpose and commercial context. In Bell Canada v. The Plan Group, 2009 ONCA 548 at para 37 the Court of Appeal stated that a contract should also be interpreted “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.”

[40] In Sattva the Supreme Court also held that a Court can consider the “surrounding circumstances” or “factual matrix” when interpreting a contract. The Court may consider the conduct of the parties and the objective evidence of the background facts at the time of the execution of the contract. The surrounding circumstances may be used as an interpretive aid for determining the meaning of the written contract.

Background and Finding of Facts

[41] The lease was signed on September 1, 1989 between the City of Ottawa (the “City”), Health Development Services Inc., In Trust (“HDS”) The Board of Trustees of the Riverside Hospital of Ottawa (the “Riverside Hospital”) and the Riverside Hospital of Ottawa Foundation (“the Foundation”).

[42] HDS’s shareholders were a group of medical doctors who became the tenants in the medical building. The parties intended that HDS would build a medical office building of approximately 50,000 square feet adjacent to the Riverside Hospital along with a covered link connecting the building to the Riverside Hospital.

[43] HDS later became Riverside Professional Centre Inc., which is the plaintiff in these proceedings.

[44] HDS built a 50,000 square foot medical office building in accordance with the plans provided to the City, which were approved by all the required authorities. HDS also increased the parking spaces in lot B to 323 parking spaces and the Hospital built an access road as shown on the site plan attached as Schedule “A” hereto.

[45] On September 1, 1989, the same date as the lease was signed, the same parties entered into a Memorandum of Agreement (“MOA”) related to construction of the medical office building and the parking lot expansion. In para 5 of the MOA, HDS agreed to expand the parking lot to 300 parking spaces in accordance with the site plan filed and identified as Schedule 4 to the MOA. The parties intended the construction of the parking lot to be an extension and improvement to the existing parking lot. The parties agreed on how the site would be developed because the site plan shows the proposed medical office building and shows the exact location of the parking spaces in lot B and the future access road.

[46] In the MOA the parties agreed that the parking lot (“lot B”) would remain the property of the Riverside Hospital and stated that it would have the exclusive right to all revenues derived from the operation thereof.

[47] At para 7 of the MOA the parties further agreed that the Riverside Hospital would designate 250 parking spaces for the purposes of meeting the City of Ottawa bylaw requirements for parking for the building to be erected by HDS. The parties agreed that the parking lot would be constructed in accordance with the site plan which laid out the 323 parking spaces.

[48] I find that when signing the lease, HDS and the Riverside Hospital objectively intended to share the use of 323 parking spaces in lot B for the following reasons:

a) The site plan did not designate any specific area for 250 parking spaces for the Professional Centre’s use and parking lot B contained more than 250 parking spaces (323);

b) The second paragraph of section 8.02 of the lease stated that forty (40) parking spaces were to be reserved and designated as being for the exclusive use of the tenants of the building. This provision indicates that the balance of the 323 parking spaces were not reserved for the exclusive use of the tenants of the building. In other words, other than for 40 reserved parking spaces, the balance of the parking spaces were available for use by the Professional Centre and the Hospital;

c) Both parties knew that the proposed building was adjacent to the Riverside Hospital and that the Riverside Hospital used both lots A and B as parking for patients, staff, doctors and visitors;

d) The Professional Centre and the Riverside Hospital never designated an area for 250 parking spaces for tenants of the building in lot B for about 29 years, until August 1, 2019 after this Application was brought. If the Professional Centre expected to receive 250 designated spaces for their exclusive use in lot B, I infer that they would have objected much sooner. The Professional Centre did not make any objection about how the parking in lot B was shared for about 25 years which indicates that it intended to share the parking spaces in lot B with the Hospital staff.

[49] Section 8.02 of the lease states that the lessee shall be entitled to use “up to” 250 parking spaces “for the purpose of meeting the City of Ottawa bylaw for the building.” In the MOA the parties stated that HDS planned to erect a 50,000 square foot building on the lands. The zoning bylaw in force for the lands occupied by the Riverside Hospital campus treated the whole area as one lot, which included the Hospital, the medical office building and parking lots A & B.

[50] Section 16(A) of the City of Ottawa’s zoning bylaw sets out the “Parking Requirement for Non-Residential Zoning.” Section 16(A) (4) 4 required one parking space for every 18.5 square metres of gross floor area. A building containing exactly 50,000 square feet was required to have 251.88 parking spaces. I find that the parties intended that 250 parking spaces were sufficient to comply with the zoning bylaw and provided sufficient parking for a building of approximately 50,000 square feet.

[51] Section 16(A) 2 of the zoning bylaw also states that the requirements for parking shall be minimums unless otherwise stated. The zoning bylaw therefore required the building to have a minimum of 250 spaces available to comply with the bylaw. Lot B initially contained 323 parking spaces. I infer that the City was satisfied that the parking lot B met the requirements of its zoning bylaw as it was a party to the MOA. The number of parking spaces in lot B was further expanded to the current 385 spaces in 2003-2004.

Analysis

[52] Good Life Corporation v. Hazeldean Properties Inc., 2008 ONCA 742 is a decision which involved parking provisions in two leases. Royal LePage’s lease guaranteed that at least 30 spaces would be available to its clients and staff and 6 of the spaces would be reserved exclusively for Royal LePage. The second lease with Good Life provided it with unlimited access to parking for Good Life’s clients and staff at no cost and imposed a constraint on Hazeldean’s ability to “reduce the available spaces for tenant parking available at the commencement of the lease.”

[53] Good Life sought an injunction to restrain Hazeldean from permitting the reservation of parking spaces for the exclusive use of any other tenant and for a declaration that Hazeldean was in violation of the parking provision because it had given exclusive parking spaces to both Royal LePage and the Bank of Nova Scotia.

[54] The Hazeldean site plan contained 275 parking spaces. In Royal LePage’s lease, the landlord guaranteed to provide it with a minimum of 30 parking spaces, with 6 of the 30 spaces marked reserved for its customers. Royal LePage sought a declaration that it was entitled to 30 spaces reserved exclusively for its use

[55] The Court of Appeal held that the parties intended that Good Life would have unlimited access to the parking lot and also decided that the landlord could not grant exclusive parking spaces to any other tenants after the lease with Good Life was signed because these spaces would no longer be available to Good Life.

[56] The Court of Appeal dismissed Royal LePage’s claim for 30 reserved parking spaces and held that only 6 spaces could be reserved for Royal LePage and the remaining 24 parking spaces could be used by all of the tenants.

[57] In the case before me, the Professional Centre’s lease stated that “the lessee shall be entitled to utilize up to 250 parking spaces for the purpose of complying with the bylaw.” The second paragraph of s. 8.02 stated that the “lessee would have the right to forty (40) parking spaces which shall be reserved and designated.” The parties never designated 40 spaces and ultimately amended this provision. This section indicates that the parties only intended to have 40 reserved spaces for the Professional Centre and the balance of 283 (323-40) parking spaces were not reserved and were intended to be shared with the Hospital.

[58] I conclude that the parties did not objectively intend that the Professional Centre would have the right to 250 reserved and designated parking spaces in lot B as the lease only provided that it had the right to 40 reserved and designated spaces. I find that the parties intended that the Professional Centre would have the right to use the balance of up to 210 parking spaces (250 – 40) in lot B along with the Hospital.

[59] The lease did not contain any restriction on the Hospital’s right to issue reserved parking spaces for lot B to others as in the Good Life situation. However, I also find that the parties intended to comply with the zoning bylaw which required that a minimum of 250 parking spaces were to be available to the tenants, staff and patients of the Professional Centre on the whole site.

[60] In 2003/2004, lot B was increased to 385 parking spaces. The Hospital did not designate or reserve any specific parking spaces for use by Hospital staff, but it issued monthly parking passes to staff members. As of October 30, 2019, the Hospital had issued 621 monthly parking passes, the holders of which could park in lot B. Mr Haye’s uncontradicted evidence was that the Hospital did not substantially increase the number of passes issued to Hospital staff in 2015. His evidence was that approximately 621 parking passes were issued to Hospital staff during the relevant time period. After October 30, 2019, the Hospital reduced the number of staff pass holders with access to part of lot B to 359. The Professional Centre’s tenants have been allowed to purchase about 100 monthly parking passes for lot B each year.

[61] In 1998 the Riverside Hospital was closed as a result of an amalgamation of the Hospitals in Ottawa and it ceased to be used as a fully functioning Hospital with overnight patients. The former Riverside Hospital premises were reopened in 2005 as an outpatient facility.

[62] There is weak evidence that at some time in 2015, the Hospital staff, who worked at the Riverside outpatient facility and had monthly parking passes, were directed to park in lot B to free up space for day patients in lot A. Mr Haye’s evidence was that such a direction was never given. Whatever the cause a large number of Hospital staff with monthly passes parked in the prime spots in lot B during the periods when complaints were made about parking. The number of vehicles parking in lot B by hospital staff caused difficulties with parking for the Professional Centre from the fall of 2015 to February of 2018 when jockey parking was instituted.

[63] Commencing in the fall of 2015, the number of available parking spaces in lot B became an issue. During the 2016-2018 period, lot B operated at or near capacity. Between May 12, 2016 and December 18, 2018 (2 ½ years), individuals seeking entry to lot B had to wait 20 minutes on 25 occasions and 10 minutes on 98 occasions.

[64] On December 4th of 2017 the tenants at the Professional Centre delivered a petition to the Hospital demanding that it take immediate action to address the parking situation. The Hospital responded within 2 months and in February of 2018 hired an attendant to jockey park vehicles.

[65] The chart prepared by Mr. Hayes shows that in 2017 at 10:00am there were on average 174 parking spaces available for non-hospital passholder parking in lot B. This means that on average 211 parking spaces were occupied by Hospital pass holders at 10:00am. At 12:00pm there were on average 183 parking spaces available for non-hospital passholder parking. In 2018 at 10:00am there were on average 188 non-hospital passholder parking spaces available and at 12:00pm there were 192 spaces available. The number of parking spaces available to the Professional Centre in 2017 and 2018 on average was less than 250 parking spaces by between 62-76 spaces at 10am. This explains why the tenants and some of their patients complained about problems obtaining parking during this time period.

[66] On February 26, 2018 the Hospital hired an attendant, to “jockey” park the cars when lot B reached full capacity. The Hospital initially hired two attendants but based on the small number of cars that had to be jockey parked, the number of attendants was reduced to one. On a majority of the days there was no requirement to jockey park cars, and on the busiest days typically only 5 cars had to be jockey parked. This evidence was not contested. I find that since February 26, 2018, no one has been denied entry to park in lot B.

[67] The factual situation related to the parking in lot B is largely uncontested and can be summarized as follows:

a) The Professional Centre and the Hospital shared parking in lot B on a first come, first served basis from 1991 until the fall of 2015 without any complaints being made;

b) The first complaint about the amount of parking available to the Professional Centre was made in the fall of 2015;

c) Between May 12, 2016 and December 18, 2019, ninety-eight (98) individuals seeking to park in lot B experienced a 10-minute delay and 25 individuals experienced a delay of 20 minutes. This means that a 10-minute parking delay occurred less than once per week during this period and a 20-minute delay occurred .19 times per week or about once every 5 weeks. I conclude that this amount of delay amounts to an inconvenience and not a breach of the lease.

d) Lot B has been accessible for parking at all times since the jockey parking attendant was hired on February 26, 2018.

e) The Professional Centre has had access to 250 segregated parking spaces in lot B since August 1, 2019 on a without prejudice basis and there is no evidence that the Professional Centre has had any parking problems since that date. On Oct. 31, 2019 the Hospital staff were no longer allowed to park in the segregated part of lot B.

[68] When the parties signed the lease, they intended to share the parking in lot B between the Professional Centre and the Hospital staff. They did so without any complaints from 1991, when the Building was completed, until the first complaint was made in the fall of 2015. I infer from the parties’ conduct for approximately 25 years of sharing parking in lot B that they did not objectively intend or expect to have 250 spaces reserved only for the Professional Centre’s doctors, staff and patients.

[69] The lease states that the Hospital agreed to allow the Professional Centre to utilize “up to” 250 parking spaces to comply with the zoning by-law. The plain meaning of the words used in section 8.02 indicates that the parties also intended to comply with the City’s parking requirements set out in the zoning bylaw which required a minimum of 250 spaces to be available for use by the Professional Centre. The City signed the lease and approved the site plan proposal and as a result I infer that the parties and the City believed that the parking spaces set out in the site plan showing 323 available parking spaces, complied with the bylaw requirements for the proposed building.

[70] No problems were experienced with parking while the Riverside Hospital continued to operate as a fully functioning Hospital. A change in use occurred when the Riverside Hospital closed in 1998. In 2004-2005 the former Riverside Hospital building began to be used as an outpatient facility. The Hospital added an additional 60 parking spaces to lot B at about that time.

[71] The Professional Centre did not negotiate any term in the lease that limited the Hospital’s ability to issue monthly parking passes to its staff or corporate Hospital personnel. However as the parties intended to comply with the parking provisions of the zoning bylaw, I infer that the parties intended that the parking in lot B would be shared with the Hospital and approximately 250 parking spaces would be available to the Professional Centre in lot B.

[72] The lease did not specify that a minimum number of parking spaces could be utilized by the Professional Centre but rather used the language of “up to 250 parking spaces”. The Hospital argued that the wording of “up to” meant that there was no minimum number of parking spaces required. It submitted that any number from 1 to 250 would meet the parking requirements of the lease. While the lease did not state that a minimum number of parking spaces would be provided to the Professional Centre, if only one parking space was made available to it in lot B, then I find that this would have been inconsistent with the parties objective intentions because they also intended to comply with the zoning bylaw, which required a minimum of 250 parking spaces to be available for the Professional Centre’s building.

[73] The plain meaning of the words “up to 250 parking spaces” indicate that this is the maximum number of spaces that the Professional Centre was entitled to use. The parties agreed that the Professional Centre could use up to 250 spaces and this constrains the Hospital’s ability to manage the parking lot in a manner that prevents the Professional Centre from using up to 250 parking spaces in lot B.

[74] On August 1, 2019 the Hospital segregated 250 parking spaces with concrete barriers for the Professional Centre, and on October 31st, 2019 required Hospital passholders to park in the remaining area of lot B. I find that this arrangement meets the objective intentions of the parties as expressed in section 8.02 of the lease.

[75] The parties were given an opportunity to make further submissions on the applicability of good faith to discretional contacts as discussed in the recent decision of Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7. In Wastech the Supreme Court held that there is a duty to exercise contractual discretion in good faith. The Hospital has always been and continues to be in complete control of the management of the parking in lot B and exercises a contractual discretion on the number of parking passes it will issue. I find that the Hospital has a duty to exercise its contractual discretion concerning parking in good faith and in a reasonable manner in accordance with the purposes of the lease and the reasonable expectations of the parties.

[76] The Hospital is not restricted from issuing parking passes for lot B, provided that the number of passes issued does not prevent the Professional Centre from reasonably accessing up to 250 parking spaces in lot B. For example, if the Hospital was to issue 2000 parking passes to Hospital staff for lot B, the Professional Centre would only be able to access very few parking spots. This would not be reasonable or in accordance with the expectations or objective intentions of the parties.

[77] I conclude that the parties intended that the parking spaces in lot B would be shared to meet the reasonable parking requirements of both parties and to comply with the zoning bylaw, and that the Hospital could issue monthly parking passes for lot B, provided the number of parking passes issued would not unduly interfere with Professional Centre’s ability to access up to 250 parking spaces in lot B.

[78] The Hospital has the unilateral authority to increase or decrease the number of parking passes that it issues for lot B, which allows it to decrease or increase the number of parking spaces available to the Professional Centre. I find that the Hospital has met its good faith obligations to manage the parking in lot B by hiring a parking attendant in Feb. of 2018 to jockey the vehicles when necessary, by segregating 250 parking spaces for the Professional Centre in lot B on August 1, 2019, and by preventing the hospital staff monthly pass holders from parking in the segregated area on October 31, 2019.

[79] To summarize, I find that the Hospital has not breached the terms of the lease for the following reasons:

a) The parties shared the parking spaces in lot B on a first come, first served basis from 1991 until the fall of 2015 without any complaints being made;

b) The lease did not specify that a minimum number of parking spaces were to be provided to the Professional Centre but stated that “up to” 250 spaces could be utilized to comply with the zoning bylaw;

c) the Professional Centre always had sufficient parking to meet its needs from 1991 until the fall of 2015. Delays of 10 minutes to obtain parking occurred less than once a week and a wait time of 20 minutes occurred about once every 5 weeks during the 2016 to 2018 time period. I find that these delays were an inconvenience and not serious enough to amount to a breach of the lease as the Hospital took reasonable good faith steps to remedy the situation;

d) In February of 2018 the Hospital hired an attendant to jockey park vehicles when lot B reached capacity to ensure that the Professional Centre had adequate parking;

e) The evidence shows that in 2017 and 2018 there were times during the day from 10:00am to 1:00pm when less than 250 parking spaces were available to the Professional Centre because of the number of parking spaces used by Hospital staff passholders. However, the fact remains that the Professional Centre had access to 385 parking spaces available on a first come, first serve basis and the lease did not give the Professional Centre the exclusive right to 250 parking spaces in lot B, rather the parking spaces were intended to be shared.

f) The Hospital took further steps on August 1, 2019 to segregate 250 parking spaces in lot B for use by the Professional Centre and on October 31, 2019 prevented its staff from using their parking passes to enter and park in the segregated area of lot B. Patients of the outpatient facility or Hospital staff without a monthly pass or members of the public can still access the segregated parking spaces in lot B, but I find that this solution implemented by the Hospital complies with the requirements of section 8.02 of the lease and with their discretionary contractual obligation of good faith.

Disposition of Issue #3

[80] For the above reasons I find that the Hospital has not breached the terms of the lease set out in section 8.02. In addition, I also find that the Hospital has taken reasonable steps to ensure its continued compliance with the lease by segregating 250 parking spaces in lot B and preventing its monthly pass holders from parking in this area as implemented on August 1 of 2019 and October 31, 2019 respectively. The actions taken by the Hospital to deal with parking problems were reasonable and complied with its discretionary contractual duty of good faith.

Issue #4: Did the Hospital breach the lease by failing to remit 90% of the total revenue generated from the 40 parking spaces each year?

[81] The lease initially stated that the Professional Centre was to have the exclusive right to use 40 parking spaces to be reserved and designated in lot B. However, the parties never designated the 40 spaces and on December 11, 1991 entered into an amended agreement whereby the Hospital agreed to transfer “90% of all revenues generated from the forty (40) parking spaces” to the Professional Centre as compensation for the exclusive use of 40 parking spaces. The parties agreed that the Hospital would retain 10% of the rental revenue from the 40 parking spaces as compensation for its administration.

[82] The Hospital has always calculated the total revenue generated from the 40 parking spaces using the annual cost of 40 monthly parking passes. The Professional Centre has accepted this method of calculation for the past 25 years until this application was brought. Mr. Palin was the Professional Centre’s agent and was present when the 1991 amending agreement was signed. He gave uncontradicted evidence that the parties intended that the total revenue from the 40 parking spaces would be calculated based on the revenue generated by 40 monthly parking passes for a year.

[83] The Professional Centre claims that in addition to the monthly pass revenue for 40 spaces it is also entitled to a share of the day use parking revenue generated from April of 2009 until July of 2020. The Professional Centre claims the additional revenue from day use parking entitles it to damages of $438,471.40.

[84] I find that the parties intended to calculate the total revenue from 40 parking spaces based on the cost of 40 monthly parking spaces for 12 months, based on Mr. Palin’s evidence that this was what both parties intended and by the parties’ conduct over the past 25 years.

[85] Some of the tenants and staff of the Professional Centre paid for and were issued monthly parking passes. The exact number of passes allocated to the Professional Centre varied over the years but was approximately 100 monthly parking passes. The Hospital agreed to remit 90% of the revenue generated from the 40 parking spaces on March 31 of each year.

[86] The 40 reserved parking spaces provided for in the lease were never designated in lot B and as a result the exact revenue generated from 40 undesignated parking spaces is unknown. The Professional Centre submits that it should receive 40/385 of the total revenue generated by lot B, including the revenue from all day parking as well as from all monthly parking passes. The amending agreement does not specify the method to be used to calculate the total revenue. The method of calculating the total revenue based on 40 monthly passes for the year is not unreasonable. Based on the parties conduct in calculating the revenue in this manner over 25 years and Mr. Palin’s evidence, I infer that the parties intended that using the annual cost of 40 monthly parking passes was a fair way to calculate the amount owed for the total revenue from 40 parking spaces.

Disposition of Issue #4

[87] I find that the plaintiff has failed to prove that it is entitled to any damages for any additional revenue from 40 parking spaces. I find that the parties objectively intended to calculate the total revenue generated by 40 parking spaces based on the cost of 40 monthly parking passes for the year.

[88] For the above reasons, the plaintiff’s claim for damages of $438,471.40 based on how the 90% of the revenue for the 40 parking spaces was calculated, is dismissed.

Issue #5: Did the Hospital have the right to collect revenue from seven (7) parking spaces in lot B which encroach on the leased lands?

[89] The site plan attached as Exhibit 4 to the 1989 MOA, outlines the lands leased to the Professional Centre. The lands leased to the Professional Centre are shown as a dark square on the site plan which includes seven (7) parking spaces in lot B, located immediately east of the access road.

[90] The Hospital constructed the access road and the Professional Centre expanded parking lot B in accordance with the site plan. The Hospital has administered and maintained parking lot B and the access road since 1991, as agreed in the MOA. Both the Hospital and the Professional Centre have used the access road as shown on the site plan since it was constructed in 1991, for their common purpose and without any objection. The Hospital has managed, maintained and collected the revenue from all of the parking spaces in lot B as shown on the site plan, including the seven parking spaces which are shown as part of the leased lands.

[91] The site plan forms an important part of the 1989 MOA. In paragraph 5 of the MOA, the parties agreed that the Professional Centre (previously NHS) would construct/expand the parking area of lot B according to the site plan and the parties agreed that “The Hospital shall have the exclusive right to all revenues obtained therefrom.”

[92] The parties’ intentions were clearly expressed in the 1989 MOA as they stated that the Hospital would receive all of the revenue generated from parking lot B, as shown on the site plan. The seven parking spaces in question are located within lot B and are clearly indicated on the site plan. As such I find that the parties objectively intended that the Hospital was entitled to receive all of the revenue from the parking spaces shown in lot B on the site plan, which included the seven parking spaces in lot B, which were within the Professional Centre’s leased lands.

[93] This finding is also supported by the parties’ conduct over twenty five years where they acted in accordance with the September 1, 1989 M0A and agreed that the Hospital was entitled to collect all of the revenue generated by all of the parking spaces in lot B, including the seven parking spaces shown as being part of the Professional Centre’s leased lands.

Disposition of Issue #5

[94] I find that the Hospital did not breach a term of the lease or the 1989 MOA by receiving the revenue from 7 parking spaces located in lot B which were part of the leased lands.

[95] The plaintiff’s claim for damages for the Hospital’s use and collection of revenues from the 7 parking spaces located in lot B, within the description of the leased lands is dismissed. In addition, the Professional Centre’s claim for an injunction to prevent the Hospital from using and collecting the revenue from the 7 parking spaces is dismissed for the same reasons.

Issue #6: Does the Hospital have the right to use the access road running over part of the leased lands without a registered easement?

[96] The proposed access road was shown on the site plan attached to the 1989 MOA which dealt with constructing the Building and expanding parking lot B. I infer from the parties’ agreement to construct an access road as described in the site plan, that the parties objectively intended that the access road would be constructed and used for their mutual benefit.

[97] The Hospital and the Professional Centre (formerly NHS) knew that the proposed access road ran through a part of the lands that were leased to the Professional Centre, because this is clearly shown on the site plan. The 1989 MOA attaching the site plan did not require the Hospital to pay any money for the use of that part of the access road that crossed the Professional Centre’s leased lands other than assuming the responsibility to pay for all maintenance costs for the access road. I find that the parties objectively intended that they could both use the access road for their common purpose and that the Hospital would not have to pay the Professional Centre to enjoy access over that part of the access road running over the Professional Centre’s leased lands based on their conduct of so doing over 25+ years with the knowledge based on the site plan.

Implied Easement

[98] In Barton v. Raine et al.; Barton, Third Party at paras 4-6 the Court of Appeal held that an easement may be implied if it is found that there was a common intention and that the benefit was an obvious and necessary inference from the circumstances.

[99] Equity supports the granting of an implied easement in favour of the Hospital over that part of the access road that runs through part of the leased lands as shown on the site plan. I infer that the parties shared a common intention that the Hospital would enjoy an easement over that part of the access road for the following reasons:

a) the Hospital and The Professional Centre have openly shared the use of the access road consistently for their mutual benefit without any objection over the last 29 years;

b) the parties entered into an agreement to develop the site and build the access road in accordance with the site plan which clearly showed the access road crossing part of the leased lands;

c) by examining the site plan it is obvious that the access road provided(s) access to both the building and to the former Riverside Hospital. In this situation it is an obvious and necessary inference that the Hospital would enjoy an easement over the access road where it crossed the leased lands; and

d) the Hospital has paid and continues to pay for all maintenance of the access road, which is used for the mutual benefit of both parties.

Disposition of Issue #6

[100] Based on my finding that the parties shared a common objective intention to grant an implied easement to the Hospital over that part of the access road that was included in the description of the leased lands, I grant the Hospital an implied easement over those lands.

[101] The Professional Centre’s Claim for damages of $1,122,000.00 for the unauthorized use of the road allowance is dismissed as is the Professional Centre’s request for an injunction preventing the Hospital from using the access road over part of the leased lands.

[102] In addition, based on the above findings the Professional Centre’s claim for damages for the loss of the revenue for seventeen potential parking spaces that could have been created on that part of the access road which crosses the leased lands, is dismissed based on my finding that the Hospital has an implied easement over the part of the access road that crosses over part of the leased lands.

Issue #7: In the event the Hospital has breached the lease in any of the ways alleged above, what damages should be awarded?

[103] I have found that the Hospital has not breached the parking provisions of the lease and is therefore not liable for damages of $ 1,33,210.00 as it did not cause the Professional Centre to have a vacancy rate above 5% or for $1,073,464.00 for lease up costs to rent out the vacant space.

[104] Even if the Hospital breached the parking requirements of the lease, I find that the Professional Centre’s evidence did not meet its burden of proof to establish that its 29.55% vacancy rate was caused by parking difficulties in lot B for the following reasons:

a) The evidence of the Professional Centre’s expert appraiser, Mr. Wilkinson, was not credible or reliable because he was not aware of several very important facts concerning the Professional Centre’s medical building. Mr. Wilkinson was not aware that the Riverside Hospital was not a fully functioning hospital, as it was closed in 1998 and its campus has only been used as an outpatient facility since 2005, without any overnight patients.

b) Mr. Wilkinson expressed his opinion that a vacancy rate of 5% was standard for medical buildings closely connected with a Hospital. However, he did not provide any industry or trade data to support his opinion. The medical office buildings used by Mr. Wilkinson were not comparable to the Professional Centre's medical building. All of the comparables he relied on, except one, were connected with fully functioning Hospitals, whereas the Riverside hospital was closed in 1998 and is not operated as a fully functioning Hospital. Mr. Wilkinson admitted under cross-examination that he was not aware that the Riverside Hospital had been closed in 1998 or that the Hospital building on the Riverside campus has only been used as an outpatient facility since 2005. In addition, none of Mr. Wilkinson’s comparables were located in the City of Ottawa and as a result, all of his comparables are not applicable to the Professional Centre’s medical office building in Ottawa.

c) The difference between a medical office building connected to a fully functioning Hospital and one without any such connection is that there is no advantage for a medical doctor to locate at the Professional Centre’s medical building (other than a specialist with a clinic at the Riverside campus), because there are no longer any overnight patients to visit at an outpatient facility.

d) I am also not persuaded of the correctness of Mr. Wilkinson’s opinion that it was not advisable to attempt to rent out the vacant space since 2018 because renting out the vacant space would have mitigated the Professional Centre’s damages. The Wilkinson firm’s office in Ottawa, as did Royal Lepage, submitted a proposal to lease up the vacant space within a six (6) month period which indicates that it was possible.

e) I also find Mr. Church’s opinion that there is no standard 5% vacancy rate for medical office buildings in Ottawa not directly connected to a fully functional Hospital to be more persuasive. Mr. Church’s opinion was supported by evidence of a wide range of vacancy rates for medical buildings in the City of Ottawa not connected to a fully functioning hospital, as set out in his report. Many vacancy rates for medical buildings in the City of Ottawa were above 5% and several were above 30%.

[105] I also find that the Professional Centre has failed to meet its burden of proof to show that the delays to obtain a parking space in lot B during the 2016-2018 period caused the 29.55% vacancy rate at the Professional Centre’s medical office building for the following reasons:

a) There are several other reasons which could have caused a 29.55% vacancy rate at the Professional Centre’s building including:

i. The rents sought by the Professional Centre may be above market rents as testified by Michael Church;

ii. The building’s location is no longer a competitive advantage since it is not connected to a fully functioning Hospital. There is no longer an advantage for a medical doctor (who is not a specialist with a clinic at the Riverside campus) to locate at the Professional Centre since the Riverside Hospital was closed in 1998. This adversely affects the buildings marketability.

b) The Hospital’s system for granting privileges to physicians was also changed in the 2005 time period. Doctors with privileges are now provided free space within the Hospital and must assume some teaching responsibilities. As a result, there is no longer any reason for a physician to locate in close proximity to the Riverside outpatient facility;

c) No evidence was presented that any prospective tenant did not rent space in the Professional Centre building because of lack of or problems with parking;

d) Sixteen (16%) of the tenants who left the building did so for reasons unrelated to parking and there is no evidence why the other 10.9% left; and

e) The original physician owners were the tenants in the medical office building. In 2008, shortly before the sale of the building to Mr. Bontge and the Professional Centre, they all signed 5 to 10-year leases, creating nearly a 100% occupancy rate. Most of these leases have reached their term and the physicians no longer have a reason to remain as tenants in this building and several have reached retirement age. This is another explanation for the vacancy rate at the Professional Centre’s building.

Disposition of Issue #7

[106] For the above reasons I find that the Professional Centre has not met its onus of proof to demonstrate that the 29.55% vacancy rate at the medical building was caused by difficulty to obtain parking in lot B. I have also found that the Hospital has not breached any of the terms of the lease and has met its good faith contractual obligations by the steps taken to ensure the parking requirements for the Professional Centre were and are being met in a reasonable manner; namely the segregation of 250 spaces on August 1, 2019 and limiting the access of Hospital passholders to the segregated area on October 31, 2019. The claim for damages is dismissed.

Punitive and Aggravated Damages

[107] For the same reasons given above, the Professional Centre’s claim for punitive and aggravated damages is dismissed as I have found that the Hospital has not breached the lease or any other agreement.

Costs

[106] The Hospital shall have 15 days to make submissions on costs, the Professional Centre shall have 15 days to respond and the Hospital shall have 10 days to reply thereafter. All costs are to be sent to SCJ.Assistants@ontario.ca to the attention of Justice Robert Smith.

Released: March 8, 2021