COURT FILE NO.: CV-22-00001252-0000
DATE: 2023 01 19
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Metro Ontario Real Estate Limited
A. Stephens and A. McGivney for the Applicant
Applicant
- and -
Embee Properties Limited
J. Bunting and J. Manger for the Respondent
Respondent
HEARD: December 9, 2022
REASONS FOR JUDGMENT
RSJ Ricchetti
THE APPLICATION. 4
THE FACTS. 5
Overview. 5
The 1971 Lease. 6
Expansion of the Shopping Center 12
The Estoppel Certificate (August 8, 2000) 12
Metro’s Renovations in 2016. 13
2016 Amendment 14
Discussions in 2015 and/or 2016. 14
Current Parking Area and Number of Parking Spots. 15
The Proposed Changes to the Property. 15
METRO’S POSITION. 17
EMBEE’S POSITION. 18
ANALYSIS. 20
Irrelevant Considerations/ Factors. 20
By Embee: 20
Referencing Leases involving other parties on other lands. 20
An LCBO is good for Metro’s business. 22
The proposed parking meets the City’s Minimum Parking By-Law. 22
Mississauga Committee of Adjustment Approval 23
The Proposed Site Plan is “Safe, Reasonable and Adequate” 24
Metro is ignoring changes in consumer behaviour 25
By Metro. 25
The Terms of the 1971 Lease As Amended Govern. 26
The Interpretation of Agreements. 27
The Interpretation of the 1971 Lease As Amended. 28
i. What are the rights and obligations under the 1971 Lease?. 29
ii. Did the 1983 and 2016 Amendment alter those rights and obligations?. 31
The 1983 Amendment 31
The 2016 Amendment 31
Commercially Unreasonable. 34
Rejection of laches and limitation period submissions. 35
Delay in bringing this Application. 36
Conclusion. 37
Estoppel 39
Does estoppel apply?. 41
Estoppel Certificate. 44
Should a Declaration be Granted?. 46
Should a Permanent Injunction be Granted?. 47
Embee’s Position. 47
A Contractual Breach or an Interference with a Proprietary Interest?. 47
Negative or mandatory injunction?. 51
The Law. 52
Permanent injunctions for breach of contract 52
Quia timet injunction. 54
Damages/alternative remedy. 62
CONCLUSION. 65
COSTS. 66
APPENDICES. 67
Appendix A. 67
Appendix B. 68
Appendix C. 69
Appendix E. 71
THE APPLICATION
[1] This matter came before Emery J. on June 1, 2022, because of a motion by Embee Properties Limited (Embee) to convert this Application into an action. For written reasons set out in Metro Ontario Real Estate Limited v. Embee Properties Limited, 2022 ONSC 5776, Emery J. dismissed Embee’s motion.
[2] Metro Ontario Real Estate Limited (Metro) seeks the following relief:
(a) a declaration that the construction of the “proposed LCBO” as shown on the Proposed Site Plan dated November 25, 2021 (“Proposed Site Plan”), which is attached hereto as Appendix “A”, would constitute a breach of the Lease (defined below) between the Applicant and Respondent and an interference with the Applicant’s proprietary interests under the Lease;
(b) a permanent injunction restraining the Respondent from constructing the “proposed LCBO” as shown on the Proposed Site Plan;
(c) a permanent injunction restraining the Respondent from interfering with the Applicant’s use and enjoyment of the existing parking area.
[3] The central issue is the interpretation of the Lease between the parties which dates to July 14, 1971 (“1971 Lease”), as amended on March 1, 1983 (“1983 Amendment”), and further amended on September 7, 2016 (“2016 Amendment”) (going forward, all amendments will be referred to as the “Lease As Amended”).
[4] More specifically, the issue is whether Embee, the current owner, can construct a building on the parking area of the leased property which will eliminate a portion of the parking area and change the parking spots near the entrance to Metro’s supermarket, a Food Basics Store.
THE FACTS
Overview
[5] Metro is the current tenant of a portion of the premises located at 2550 Hurontario Street, Mississauga, Ontario (the “Property”). Metro, under the name of “Food Basics,” is the anchor tenant on the Property. The Food Basics is currently a 32,727 square foot supermarket.
[6] The Property also includes a dollar discount store, a European Deli Counter, a dry cleaner, a Little Caesars pizza restaurant, a Chatr Mobile, and a sit-down family restaurant called Orchard Family Restaurant (the “Shopping Center”).
[7] Embee is the Property’s current Landlord/Owner, having acquired it in 2000.
[8] Embee seeks to build a new 8,000 square foot LCBO on the Shopping Center’s parking lot, attached and immediately south of Metro’s Food Basics supermarket.
[9] Embee’s development will result in an LCBO building on what is existing parking area relatively close to the front of the Food Basics supermarket, the removal of approximately 36 parking spots near the entrance to the Food Basics supermarket, and the removal a shopping cart carousel currently located on the site of the proposed LCBO building. It will also reduce the useability of one of the Properties current entrance ways.
The 1971 Lease
[10] The Great Atlantic & Pacific Company of Canada Limited (the predecessor to Metro), as tenant, and Rolling Lands Limited, as landlord/owner, entered into a Lease dated July 14, 1971 (the 1971 Lease). The Great Atlantic & Pacific Company of Canada, Limited, subsequently assigned its interest in the Lease to A&P Properties Limited. By Articles of Amendment dated October 1, 2008, A&P Properties Limited changed its name to Metro. I will refer to all tenants in this succession chain as “Metro.”
[11] Embee acquired the Property in 2000 from the then current owner. I will refer to the owners’ succession chain as “Embee.”
[12] At the time the 1971 Lease was entered into, the Shopping Center on the Property had not yet been built. Metro was to be the anchor tenant. Metro would operate a supermarket on its portion of the Property (“Supermarket”).
[13] The 1971 Lease provided the following terms:
WHEREAS the Lessor is the registered owner of certain immovable property situate in the Town of Mississauga, in the Province of Ontario, the whole shown on the site plan attached as “Exhibit A”, and more particularly described in Schedule “B” hereto attached, which said immovable property in hereinafter called the “Centre”.
WITNESSETH that the Lessor hereby leases and demises to the Lessee the store building to be erected upon and contained within the limits of the Centre and shown in red on plot plan attached hereto (Exhibit “A”), and more particularly described in Schedule “A” annexed hereto, which said building, together with rights in Mall and Parking Areas, are hereinafter called the “Leased Premises”.
SCHEDULE “A”
(a) A building having dimensions of 132’8’’ x 189’0’’ (25,000 square feet) and
(b) A paved, properly drained, adequately lighted and striped common parking area consisting of approximately 124,656 square feet, having a minimum capacity for 201 automobiles, including but not limited to greenbelts, driveways, sidewalks, service areas, accessways to and from adjoining streets, roads and highways, all as shown on Exhibit “A”, to be used in common with other occupants of the Centre. It is agreed that the area shown greenbelt of 16, 906 square feet will be ceded to the Town at a later date with no other changes to this lease.
- PEACEFUL ENJOYMENT:
The Lessor covenants with the Lessee for peaceful enjoyment and possession of the Leased Premises for the term aforesaid and any renewals thereof.
- USE OF LEASED PREMISES:
Save as provided herein, the Lessee shall use the Leased Premises only for the purposes of its business of general retail supermarket merchandising; it being agreed, however, by Lessor that the operation may be of a discount nature, as carried out in Lessee’s various other premises under the names “A & P Discount Foods” or “A-Mart”.
- APPROVAL:
The Lessor, before he submits the final plans and specifications to the proper authority for permits, shall submit them to the Lessee for its approval in writing, and such approval must first be obtained, otherwise this lease may, at the option of the Lessee, be terminated and the same shall thereupon be null and void, save and except that this option to terminate shall not exist should changes be forced by the permit authority.
- LESSEE TO PAY TAXES ON LEASED PREMISES:
The Lessee shall pay to the Lessor, as additional rent, all real property taxes levied with respect to Lessee’s leased premises, and its pro rata share of the parking and common area taxes, include tax with respect to landscaped areas, sidewalks, etc., for the period from lease commencement date up to and include the final day of the first complete tax year as covered by municipal tax bills.
- LESSEE’S RESPONSIBILITY FOR REPAIRS:
Subject to the provisions of this lease relating to damage or destruction by insured perils, the Lessee shall take good care of the interior of the leased premises and all fixtures, machinery and equipment contained therein and forming part thereof and make good all damage caused by the negligence of the Lessee, its agents or employees, and without limiting the generality of the foregoing, the Lessee shall be responsible for all maintenance within the leased store premises including maintenance of plumbing, electric and heating equipment and fixtures, as well as floors, walls, ceilings, doors and plate glass. This maintenance responsibility is not to include repairs to damage caused by structural defects which repairs shall be the responsibility of the Lessor. Capital replacement of components necessary by way of normal attrition or rendered unfit by normal wear and tear to remain Lessor’s responsibility.
- MAINTENANCE EXTERNAL TO LEASED PREMISES:
Subject to the provisions of this lease relating to damage or destruction by insured perils, the Lessee shall be responsible for its share of repair costs to the building exterior, and its share shall be that proportion of total costs that its rented gross area bears to the total building gross leasable area. Repairs to damage due to structural defects not to be included, but to remain the responsibility of the Lessor.
- CIRCULATION OF TRAFFIC:
The Lessor shall in any event and at all times, maintain free, easy and open access between he leased premises and all other premises in the Centre so that the leased premises and such other premises shall appear to be and operate as one Centre and so that customers shopping and persons doing business anywhere in the Centre shall be able to pass freely on foot and with motor vehicles to the leased premises from all such other premises and the Lessor shall not permit any signs or other indication to the contrary or any obstacles, fences or other structures to be placed or erected in the Centre, which impede or tent to impede such access or which divide the leased premises from any other part of the Centre.
- USE OF PARKING AREA:
All automobile parking area now or hereafter developed in the Centre shall be kept reasonably available by the Lessor for the free parking of automobiles of customers of or persons doing business with the tenants now or hereafter occupying premises in the Centre while such customers or persons are shopping or doing business in the Centre, and no persons shall be permitted by the Lessor to park motor vehicles thereon except for the purpose and to the extent aforesaid. In the event that any persons use said parking areas for any purpose or to any extent other than as aforesaid, the Lessor shall, at the request of the Lessee, take such action, including the erection of fences or other barricades if necessary, as may be required to present such use.
- LESSEE’S SHARE OF SERVICES FOR COMMON AREAS:
The Lessee shall pay to the Lessor as additional rent the Lessee’s proportionate share of the cost of the following services provided by the Lessor in respect of areas of the Centre common to the Lessee and other tenants in the Centre, such proportion to be that portion that Lessee’s gross leased area bears to the total leasable gross area in the Centre:
(emphasis added)
[14] Noteworthy is that “Leased Premises” were defined as the “rights in Mall and Parking Areas.” Aside from the Supermarket’s interior premises, the Parking Area on the Property was to be common for all tenants and be approximately 124,656 square feet with a minimum of 201 parking spots (“Parking Area”).
[15] Metro was to have peaceful enjoyment and possession of “the Leased Premises.” A copy of the Site Plan was attached to the 1971 Lease and is attached to these reasons as Appendix A.
[16] The 1971 Lease went on to provide:
• In para. 29, that the landlord could not create any obstacles which impede or tend to impede access to the Shopping Center.
• In para. 30, that the Parking Area would be kept “reasonably available by the landlord for the free parking of automobiles for the customers of or persons doing business with the tenants.”
• In para. 32, that the tenant was to pay additional rent for maintaining the Parking Area.
• Eventually, 16,909 square feet from the greenbelt common area would be ceded to the Town “with no other changes to this lease.” This would reduce the Common Area, consisting mostly of a Parking Area, to 107,750 square feet. 1983 Amendment
[17] In 1983, Metro expanded its supermarket, taking over additional space in the Shopping Center originally used by other tenants.
[18] The parties (Rosart Properties Inc., the corporate successor to Rolling Lands Limited and The Great Atlantic & Pacific Company of Canada) amended the Lease on March 1, 1983.
[19] The relevant terms include:
ARTICLE 2 – DEMISED PREMISES AND COMMON AREA
2.A. The paragraph beginning with “WITNESSETH” on page 1 of the Lease and page 2 of the Lease are hereby deleted and replaced by the following:
“Landlord hereby leases to Tenant and Tenant hereby takes from Landlord the premises labeled “Enlarged Demised Premises” including the area marked “Addition” and shown on Exhibit A and the improvements now or hereafter erected on said premises (said premises and improvements being hereinafter collectively called the Leased Premises or leases premises), together with the benefit of any and all easements, appurtenances, rights and privileges now or hereafter belonging thereto. The Leased Premises are located within that certain parcel of land [herein called the Land) described in Exhibit B. Any buildings and improvements now or hereafter erected on the Land shall be hereinafter called Improvements. The Land and the Improvements shall be hereinafter collectively called the Centre. Landlord hereby grants to Tenant the right to use, in common with other permitted tenants of the Centre, all portions of the Centre no included within the building sites referred to in Section 3A hereof including, but not limited to, parking areas, roads, streets, drives, tunnels, passageways, landscaped areas, open and enclosed malls, exterior ramps, walks and arcades (hereinafter collectively called the Common Area) for all customary and proper purposes.”
ARTICLE 3 – SITE PLAN
3.A. Schedule “A” to the Lease is hereby deleted and replaced by Exhibit “A” annexed hereto. Whenever reference in the Lease is made to Schedule “A” or to the site plan, it shall be deemed to be a reference to the site plan attached hereto as Exhibit “A”.
3.B. Subparagraph (a) under the heading “Schedule ‘A’” on page 2 of the Lease is deleted and replaced by the following: “A building having a ground floor area of 31,466 square feet”. The figure “124,656 square feet” in the third line of subparagraph (b) under the heading “Schedule ‘A’” on page 2 of the Lease is deleted and replaced by “107,688 square feet”. The figure “201” in the 4th line of the aforementioned subparagraph (b) is deleted and replaced by “215”.
(emphasis added)
[20] The 1983 Amendment replaced the Original Site Plan with a new site plan (the “1983 Site Plan”). The 1983 Site Plan was revised to delete the greenbelt previously ceded to the Town. A copy of the 1983 Site Plan that accompanied the 1983 Amendment is attached to these reasons as Appendix B.
[21] The 1983 Site Plan shows a common parking area of 107,688 square feet and now specified that a minimum of 215 parking spots were to be provided in the Parking Area.
[22] Noteworthy is that in Article 2 of the 1983 Amendment, the landlord specifically granted to the “[t]enants the right to use, in common with other permitted tenants of the Centre, all portions of the Centre, not included within the building sites referred to in Section 3A hereof, including but no limited to, parking areas, roads, streets, drives, tunnels, passageways, landscaped areas, open and enclosed malls, exterior ramps, walks and arcades (hereinafter collectively called the Common Areas) for all customary and proper purposes.”
[23] Accordingly, except for the building space leased by all tenants, including Metro, the landlord granted Metro the “right to use” all common areas, “but not limited to, parking areas.” The 1983 Site Plan identifies these areas in the 1983 Site Plan.
Expansion of the Shopping Center
[24] At some point before 2000, the Shopping Center was expanded to the East, adding a further small retail area. This addition was the furthest away from the Metro supermarket.
[25] Attached as Appendix C is a copy of a site plan showing the expansion in crosshatch.
[26] This expansion reduced the Parking Areas to 102,000 square feet and the parking spots from 215 to 211. The parking spots eliminated were the furthest away from the Metro supermarket.
[27] Metro made no objection nor any suggestion that the Lease As Amended by the 1983 Amendment had been breached.
The Estoppel Certificate (August 8, 2000)
[28] In connection with its acquisition of the Property in 2000, Embee obtained an estoppel certificate, dated August 8, 2000 (“Estoppel Certificate”), from A & P Properties Limited, Metro’s predecessor.
[29] Section 1(d) of the Estoppel Certificate provides that the Tenant “acknowledges, covenants and represents” that “the premises demised by the Lease have been completed in accordance with the Landlord’s obligations,” that there was no outstanding dispute under the Lease, and there was no default by the Landlord.
[30] Paragraph (g) of the Estoppel Certificate also provided:
There is no agreement between the Landlord and the undersigned, other than as contained in the Lease and the Lease Amending Agreement, pertaining to the obligations of the Landlord and the rights of the undersigned relating to the use and occupation by the undersigned of the demised premises…
[31] Embee relied on this Estoppel Certificate when it acquired the Property.
[32] Embee submits that the Estoppel Certificate is evidence that Metro would not enforce any rights it had to the Common Areas, including the Parking Area or number of parking spots.
[33] After Embee acquired the Shopping Center in 2000, Embee made no changes to the Parking Area at the Shopping Center.
Metro’s Renovations in 2016
[34] Metro renovated its Supermarket in 2016.
[35] After Metro’s 2016 renovations, the number of parking spots were reduced from 211 to 204 or 206 (the parties disagree on the exact number). This reduction was due to the City’s requirement that there be “accessible parking stalls” in front of the Supermarket. In my view, nothing turns on this.
2016 Amendment
[36] As the final lease extension under the 1983 Amendment was drawing nearer, the parties entered into the 2016 Amendment.
5.2 All capitalized terms used in this Agreement shall have the same meanings as set out in the Lease, unless defined specifically in this Agreement.
5.3 The Parties confirm that in all other respects, the terms of the Lease will remain in full force and effect, unmodified, except to the extent set forth in this Agreement.
[37] The 2016 Amendment permits various extensions of the term of the Lease until January 31, 2043.
[38] In the preamble, the 2016 Amendment describes the Property and goes on to state that it is “comprising approximately 31,466 square feet of Gross Rentable Area” (the “Leased Premises”). Embee relies on this section of the Preamble to submit that the Leased Premises no longer included the Parking Areas and that any rights that Metro might have had in the Common Areas, including the Parking Area or the minimum number of parking spots, were eliminated.
Discussions in 2015 and/or 2016
[39] Metro considered alterations to the supermarket but chose not to proceed. Metro advised Embee that Metro was not proceeding with the changes: “[t]he biggest reason is that they don’t feel they can grow the business while losing 18 important parking spots in an already busy parking lot.”
Current Parking Area and Number of Parking Spots
[40] Embee has not made any changes to the Parking Area since acquiring it in 2000.
[41] Today, there are 204 or 206 parking spots in the Parking Area of approximately 101,984 square feet.
The Proposed Changes to the Property
[42] On December 10, 2021, Embee applied to the City of Mississauga for Site Plan Approval to construct an LCBO building in the Parking Area. Embee’s Proposed Site Plan shows an 8,055 square foot LCBO new retail addition, adjacent to the Foods Basics Supermarket, located on the southerly portion of the Parking Area. A copy of the proposed Site Plan is attached as Appendix D.
[43] By letter dated December 17, 2021, Metro objected to the Proposed Site Plan as violating the 1971 Lease As Amended. The letter made it clear that Metro will not consent to the addition of the LCBO. Further, Metro would oppose the development.
[44] By letter dated January 31, 2022, Embee responded that Metro’s assertion that the development of the LCBO would violate the Lease As Amended was “incorrect and inconsistent with our longstanding relationship as well as Metro’s past conduct.” The Embee letter confirms that the Proposed Site Plan provides for only 200 parking stalls and that Metro is “on notice that we are proceeding with the development.”
[45] On March 28, 2022, Embee submitted a Minor Variance Application to the City of Mississauga’s Committee of Adjustment to permit the LCBO development. The proposed LCBO development would eliminate 36 parking spots in the Parking Area south of the Food Basics, the shopping cart carousel presently in the area, and the current awning covering a walkway to the Food Basics from the south parking.
[46] Effectively, this would reduce the Parking Area to 93,929 square feet and the parking spots to 200. After Metro raised the issue of the reduction of the parking spots, Embee created additional parking spots to the rear of the building. These additional parking spots are shown in Appendix E. There is no doubt that these additional parking spots at the rear of the Shopping Center, located behind the LCBO proposed building and other retail buildings, do NOT provide Metro with comparable or even reasonable parking for its customers.
[47] Further, due to the proposed LCBO building’s location, one of the King St. entrances, now used to directly access the Shopping Center’s immediate parking area, will no longer provide automobile direct access to the Shopping Center’s main parking area. Customers arriving by automobile through this entrance will have to drive along the rear of the Shopping Center, emerging on the north edge of the Property before entering the main Parking Area to return back to parking areas near the front of the Food Basics’ entrance.
[48] Embee’s response that the “entrances don’t change” ignores the impact that the west entrance on King has of no longer allowing direct access to the main Parking Area in front of Food Basics.
[49] When a copy of the LCBO lease was produced during this litigation, it showed that LCBO had been granted 7 exclusive parking spots, thereby further reducing the number of parking spots available to Metro’s customers. Again, because of Metro’s objection, what followed was a “waiver” by LCBO to the 7 exclusive parking spots.
METRO’S POSITION
[50] Metro states that it relies on its leasehold “rights” to the Parking Area (including the entrances) and the number of parking spots. Metro states that parking and parking spots are important to the success of its business:
Parking is of critical importance to Metro’s business. The grocery supermarket business is highly competitive. The convenience of the shopping experience is a key driver of customer choice. In this regard, Metro loses customers and market share when its customers are unable to find convenient parking stalls at our premises that are located within a reasonable proximity of the stores entrance. Many customers are unwilling to park in inconvenient stalls, given the stalls’ distance from the Food Basics store and considering that customers are carrying bags of groceries, pushing a cart of groceries or accompanied by young children. The unattractiveness of inconvenient parking stalls increases in Winter when the condition of the parking lot is impacted by snow and ice.
[51] Metro submits that the changes to the Parking Area, the entrance, and the parking spots, if implemented, would violate its proprietary interests and breach Embee’s obligations under the 1971 Lease As Amended. The proposed Site Plan (showing the LCBO building) would, as set out in Metro’s factum:
(i) violate the Landlord’s obligations to the Tenant under the Lease to provide:
(A) a common parking area of 107,688 square feet; and
(B) 215 parking stalls.
(ii) constitute a derogation of the Lease;
(iii) interfere with the Applicant’s use and enjoyment of the Leased Premises;
(iv) constitute wrongful interference with the Applicant’s propriety interests;
(v) constitute a trespass upon the Leased Premises;
(vi) constitute a nuisance on the Leased Premises; and
(vii) constitute a breach of the Landlord’s duty of honest performance of the Lease.
EMBEE’S POSITION
[52] Embee submits it has operated on the “understanding” that neither it nor Metro were following the (at that point) almost 50-year-old 1971 Site Plan in the operation and configuration of the Property. Embee submits it specifically relied on this “understanding” when it proposed the LCBO development and entered into its lease with the LCBO.
[53] Embee submits it did not “understand, expect, or believe” that Metro had (as set out in Metro’s factum):
(a) any basis to object to the addition of the LCBO based on a site plan that had not been followed for many years;
(b) the right or ability to insist on 215 parking spaces
(i) when Metro’s predecessor acknowledged in its Estoppel Certificate that there was no default by the Landlord and at that time, there were fewer than 215 spots, and
(ii) when the parties have operated for years with 204 parking spaces and in circumstances where it was Metro that reduced the number of parking spaces to 204 through its own renovation and reconfiguration of the parking area; and
(c) the right to insist on a certain parking area configuration or a right to insist on a certain quality of parking spaces.
[54] Embee submits the reconfigured parking area, parking spots and entrance changes, are reasonable, safe, and adequate, as confirmed by:
(i) the parking study undertaken by LEA Consultants (discussed below) and
(ii) the fact that the new site plan was approved by the City of Mississauga Planning and Building Department (and signed off by the City of Mississauga Transportation and Works Department, each of which is discussed below). The City of Mississauga’s revised parking standards, which significantly reduce the minimum number of parking spaces required for the Centre, seem to be an acknowledgement by the City that the landscape and consumer shopping experience have changed. Notably, the Hurontario LRT will significantly change the consumer shopping experience and reduce consumer reliance on cars.
[55] Embee submits that the LCBO is a positive addition for the Shopping Center and for Metro.
ANALYSIS
[56] This is a lease interpretation application. No material facts are at issue. The essential question is, “what are the rights and obligations of Metro and Embee under the 1971 Lease As Amended?”
Irrelevant Considerations/ Factors
[57] What is in dispute are irrelevant to this court’s decision. Both parties include evidence and make submissions that are irrelevant to this court’s analysis and determination.
By Embee:
Referencing Leases involving other parties on other lands
[58] Some other leases involving other parties on other lands do have a no-build clause. Some other leases involving other parties on other lands do not have a no-build clause. Some other leases involving other parties on other lands, have modified provisions which restrict what a landlord can or cannot do (including whether it can add additional buildings) on the subject property or require consent of the tenant (usually subject to a reasonableness obligation).
[59] Embee relies on the fact that there is no “no build” clause in the 1971 Lease As Amended. I agree there is no such clause in the 1971 Lease As Amended. But that doesn’t assist in deciding whether and what proprietary interests were granted in this case under this 1971 Lease As Amended.
[60] Reference to what is contained in other leases, involving other parties, involving other lands, is of no use to the task at hand – what are the rights and obligations, at this time, under this 1971 Lease As Amended.
[61] The effect of Embee’s submission is that without a “no build” clause, Embee is free to do as it pleases to the common areas in the Property.
[62] There is a particularly heavy burden on a party seeking to set up a custom or usage even when such a term is not inconsistent with the existing written terms, as it is here. The evidence before me is a far cry from establishing some custom or usage that permits a landlord to develop its land, including parking areas, as it sees fit, regardless of the terms of the Lease between the parties or where there is no “no build” clause.
[63] There is no evidence that the parties, at the time they entered the 1971 Lease, understood, agreed to, but failed to memorialize in the 1971 Lease (or any subsequent amendment) a term that the landlord could unilaterally, in any manner it might choose, remove a portion of the Parking Area or reduce the number of parking spots. In fact, the evidence is to the contrary, as such a term is clearly inconsistent to the rights granted to Metro’s predecessor with regard to the Common Area, including the Parking Area and number of parking spots.
[64] Referencing Embee’s “experience” is irrelevant. A party’s experience is not a basis to vary or amend a clear provision of a written lease – especially where there is an entire agreement clause and when that party was not a party to the 1971 Lease which they voluntarily assumed its rights and obligations.
[65] I reject this evidence and submission of Embee.
An LCBO is good for Metro’s business
[66] Embee’s views that the addition of the LCBO will “improve the shopping center, including the sales of Metro” is biased and partial. On the other hand, Metro states that a change as proposed in the parking area and parking staff will negatively impact its business.
[67] It is neither this court’s role nor jurisdiction to determine whether the proposed LCBO development benefits either party. Whether or not the LCBO development is good for either party, does not change the analysis as to what the parties’ rights and obligations are under the terms of the 1971 Lease As Amended.
[68] Embee’s speculative view as to the positive impact on Metro’s business is irrelevant. Deciding which party is correct is neither necessary nor desirable for this application.
The proposed parking meets the City’s Minimum Parking By-Law
[69] Compliance with the City’s minimum parking by-law adds nothing to this court’s analysis. Parties are free to negotiate terms in a lease that provide for more parking than meets the City’s By-Law.
[70] The City’s By-Law is not intended to deal with specific site and business realities where a particular retailer may want and is able to negotiate into a lease, greater parking for its business.
[71] The City simply sets a minimum parking standard for approving a Site Plan.
[72] This submission is irrelevant.
Mississauga Committee of Adjustment Approval
[73] Embee points to the Mississauga Committee of Adjustment’s approval of the LCBO development and the Proposed Site Plan and submits that this approved Application is at bar or factors into this court’s determination under the Application.
[74] I disagree.
[75] It was not the role or jurisdiction of the Mississauga Committee of Adjustment to determine Metro’s rights or Embee’s obligations under the 1971 Lease As Amended. The Committee of Adjustment did not do so. The Committee of Adjustment used an Official Plan, Secondary Plans, Zoning by-laws, and site-specific by-laws to determine whether it would permit the variation from the applicable by-laws.
[76] The fact that the Committee of Adjustment may have different views of a grocery store’s parking requirements at this location should be, “when the LRT is up and running,” is irrelevant. The Committee of Adjustment’s views may be driven by the fact the City has spend considerable money on building the LRT and wishes more persons to use public transit than parking lots: “in light of the funding spent on the LRT, it is important to have people use it.” Nevertheless, this view of the Committee of Adjustment does not alter the rights and obligations between these parties under the 1971 Lease As Amended.
[77] This submission is irrelevant.
The Proposed Site Plan is “Safe, Reasonable and Adequate”
[78] Embee included, as part of its evidence, a parking study by LEA Consultants who concluded that the City’s approval of the Site Plan is evidence of it being “safe, reasonable and adequate.”
[79] Again, if parties were permitted to change the terms of a lease simply because an expert or the municipal authority opined that a proposal was “safe, reasonable and adequate,” the certainty of legal obligations under written leases (with an entire agreement clause) would be thrown into chaos.
[80] LEA Consultants went beyond their role as an expert when they included in their report their interpretation of Embee’s obligations for the Parking Area and the minimum number of parking spot obligations under the Lease As Amended. This is entirely inappropriate for an expert.
[81] LEA Consultant’s report is not useful to this court in this Application.
Metro is ignoring changes in consumer behaviour
[82] Embee’s submits that Metro is ignoring that “current consumer behaviour indicates a decline in the use of automobiles for shopping purposes leading to a decline in the need for parking.”
[83] Again, even if true, this is not a proper legal basis to ignore, amend, or interpret the terms of the 1971 Lease As Amended and Embee’s obligations thereunder.
By Metro
[84] Metro submits that the current and proposed parking is inadequate or unsuitable. While I accept that parking for supermarkets at shopping centers are important to the success of the supermarket, the desire to have both a preferred number and location of parking spots does not, by itself, create any proprietary rights to Metro or factor into the proper interpretation of the 1971 Lease As Amended.
[85] If parking for supermarkets is important to the success of shopping centers, then that is all the greater reason for why a shopping center tenant should expressly negotiate and include specific and designated parking rights into their leases.
[86] The issue to be decided is not whether Metro likes or dislikes the proposed Parking Area or parking spot layout.
The Terms of the 1971 Lease As Amended Govern
[87] The wording in a lease governs the landlord’s right to make changes, such as additions to the shopping center, is not novel. The precise issue was recognized and discussed in O’Donoghue, John J., “Changes or Additions to the Centre”, in Shopping Centre Leases: A Collection of Articles and Precedents, ed, Harvey M. Haber (Agincourt: Canada Law Book Limited, 1976), at pp. 487-506:
The leases will undoubtedly affect the owner's manoeuvrability and therefore should be thoroughly examined, especially the leases of the anchor tenants, to determine: (a) the right of the owner to change the existing structure or to enlarge into the areas previously not built on; (b) restrictions on competition, e.g., no additional food store, junior department store, department store exceeding 50,000 square feet, etc.; (c) parking ratio.
What happens in a situation where a tenant refuses to co-operate in permitting a landlord to proceed with the proposed addition as a result of some restriction in the lease? Obviously, the wording of the restrictive covenant must be carefully scrutinized. Only in extreme cases is it wise to proceed to the Courts - the financial viability of the project may be lost by the. time a decision is handed down; a negotiated settlement is the wisest course.
(emphasis added)
The Interpretation of Agreements
[88] Interpreting a written agreement is to give effect to the parties' mutual and objective true intentions as expressed in the written document, as a whole, at the time the agreement was made.
[89] In the absence of ambiguity, the plain and ordinary meaning of the words, read in light of the entire agreement and surrounding circumstances, should be adopted, except where doing so, would result in a commercial absurdity or create an inconsistency with the rest of the agreement.
[90] The surrounding circumstances (also described as the context in which the agreement was made) include the facts and circumstances known to both parties at the time of executing the agreement. However, the courts should not go so far as to create a new agreement unsupported by the objective meaning of the words and the commercial reality of the agreement the parties made.
[91] The interpretation of the agreement relies on the objective meaning of the words used. The subjective intention of the parties is inadmissible. See Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205 at para. 24.
[92] Evidence of the parties' conduct subsequent to making the agreement does not form part of the factual matrix, and it should only be considered if, after considering the words used and the circumstances at the time, the term of the agreement remains ambiguous. See Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912:
40 The issue addressed in this appeal is whether evidence of the contracting parties' conduct subsequent to the execution of their agreement is part of the factual matrix such that it too is admissible at the outset, or whether a finding of ambiguity is a condition precedent to its admissibility.
46 These dangers, together with the circumscription of a contract's factual matrix to facts known at the time of its execution, militate against admitting evidence of subsequent conduct at the outset of the interpretive exercise. Evidence of subsequent conduct should be admitted only if the contract remains ambiguous after considering its text and its factual matrix.
(emphasis added)
The Interpretation of the 1971 Lease As Amended
[93] Embee’s position is that the 1971 Lease As Amended “does not impose any restrictions or positive obligations on the landlord relating to altering the parking area or maintaining a particular configuration of parking area” (para. 39 of Embee’s factum). In other words, Embee’s position is that it is free to do with and in the Parking Area as it sees fit without input from or liability to Metro.
[94] There are several issues to decide:
i. What are the rights and obligations of the parties under the 1971 Lease with regard to the Parking Area, Parking Spots and Entrances?
ii. Did the subsequent amendments in 1983 and 2016 to the 1971 Lease alter those rights and obligations?
i. What are the rights and obligations under the 1971 Lease?
[95] There is no doubt that Metro’s predecessor was, in 1971, granted rights to the Parking Areas.
[96] The 1971 Lease went on to grant Metro’s predecessor the “Use of Parking Area” with a minimum number of parking spots.
[97] I conclude that the 1971 Lease expressly gave Metro’s predecessor leasehold rights, in common with other tenants, over the use of the defined Parking Area (124,656 square feet with 16,906 to later be ceded to the Town) with a minimum number of 201 Parking Spots and related common areas.
[98] I reject Embee’s position that the words “hereafter developed” in Section 30 of the 1971 Lease reflected that the Landlord “may and is permitted to alter the parking area” (para. 39 of Embee’s factum). This interpretation is directly inconsistent with the definition of Leased Premises (Schedule A), the grant of peaceful enjoyment of the Leased Premises (para. 3) and the Use of the Parking Area (para. 30).
[99] I reject what is implicit in Embee’s submission – that, under the 1971 Lease, the landlord is permitted to alter the Parking Area as it subsequently sees fit without the written consent by way of an amendment to the lease and to deprive the tenant from the use and enjoyment of the Parking Area and related common areas.
[100] As expressed in Peter M. Harvie’s “Agreements to Lease” in Shopping Centre Leases: A Collection of Articles and Precedents, ed., Harvey M. Haber (Agincourt: Canada Law Book Limited, 1976), pp. 21-33, at para. 29, the necessity of having wording in the lease to permit changes to common areas such as parking areas must be expressly included by the landlord; otherwise, the landlord may not be able to make any substantial alteration:
The lease must describe if and to what extent the common areas and facilities can be altered, expanded, reduced, relocated or eliminated. Landlords need and want flexibility… It is imperative that the landlord clearly reserve these rights in very specific language since the presence of a site plan, the wording of the definition and the fact that the common areas and facilities were actually built will not otherwise allow any substantial alteration.
(emphasis added)
[101] The above statements are consistent with the authorities. In Langley’s Ltd. v. Lawrence Manor Investment Ltd., [1960] O.W.N. 436, at paras. 14-15, the court stated:
14 Having considered these submissions by the defendant, I am nevertheless of the opinion that the plaintiff was entitled to expect that the plan attached to its lease indicated the extent and location of the parking area available to it in common with other tenants then located or to be located in the area on the plan indicating the position of the buildings in the shopping centre.
15 I find that the erection of Morgan's store by Lawrence Manor constituted a breach of the Langley lease. In addition, I find that the erection of Morgan's store by the defendant Lawrence Manor constituted an obstruction of Langley's right to the use of the parking area shown on the plan attached to its lease.
(emphasis added)
ii. Did the 1983 and 2016 Amendment alter those rights and obligations?
The 1983 Amendment
[102] The 1983 Amendment clearly confirmed Metro’s “right to use, in common with other permitted tenants of the Centre, all parts of the Centre not including within the building sites referred to in Section 3A hereof including, but not limited to, parking areas, roads, streets, drives, tunnels, passageways, landscaped areas, open and enclosed mall, exterior ramps, walks and arcades (hereinafter collectively called the Common Area) for all customary and proper purposes.”
[103] This Parking Area was now recorded as 107,688 square feet (being the original square footage less the amount ceded to the Town) in the 1983 Amendment.
[104] Accordingly, as of 1983, by the 1983 Amendment, Metro continued to have leasehold (i.e. proprietary) rights to the Common Areas, expressly including the Parking Area, which now provided that there be a minimum of 215 parking spots and the entrance ways and common areas.
The 2016 Amendment
[105] The purpose of the 2016 Amendment, when considered as a whole, was to:
a) Grant Metro additional lease extension options and describe how to calculate the rentals to be paid; and
b) Alter the Notice provisions to update the parties to whom notice was to be given.
[106] Embee seeks to rely on the wording in the Preamble of the 2016 Amendment which states, “the premises located at 2550 Hurontario Street, Mississauga (the “Property”), comprising approximately 31,466 square feet of Gross Rentable Area (the “Leased Premises”)….” The 2016 Amendment goes on to state that the capitalized terms used in the Agreement have the same meanings as set out in the Lease, “unless defined specifically in this Agreement.”
[107] Embee submits that this wording effectively removed Metro’s rights, if any, in the Parking Area or the number of Parking Spots or related common areas.
[108] I reject this submission.
[109] First, there is no evidence that either party specifically turned their mind to an amendment of such magnitude or that the parties intended that Metro’s clear Parking Area rights (use and number of parking spots) in the 1971 Lease and 1983 Amendment were being altered or removed (after 43 years entitlement and use of such areas).
[110] Second, it would make no commercial sense that Metro would, after 45 years of enjoying those Parking Area rights (use and number of parking spots), then give Embee absolute and free control to do whatever it chose to do with the Parking Area, including developing the Parking Area, or reducing the number of parking spots or eliminating entrance ways, as Embee saw fit without regard to Metro’s needs, wants, input or consent.
[111] The U.S. authority of Madigan Bros. v. Melrose Shopping Centre Co., 463 N.E.2d 824 (Ill. App. Ct. 1984) involved similar lease language to the case at bar, where the landlord sought to construct a new building in the parking area. The Illinois Appeals Court stated:
After considering the documents presented, we conclude that the *856 intent of the parties was to grant the shopping center tenants an easement in the parking areas for ingress, egress and parking as set out in the plat. It is the law in Illinois that where no reservation by the landlord of the right to alter the common areas is made in the lease and where the site plan attached to the lease accurately and precisely delineates the common areas, the tenant has an easement to the particular configuration of common space delineated by the lease and attached plats…
In order to make a tenant's easement over the common areas moveable, the lease must expressly and specifically grant the landlord the right to change the arrangement of the common areas. …
No such right is granted to the landlord in the instant case. Certain provisions in the lease contemplate enlargements **829 ***275 of the shopping center, but these merely specify plaintiff's rights in such circumstances and do not specifically grant the landlord the right to rearrange the parking areas. Unlike Advertising Checking Bureau, there is no provision in the Madigan lease which expressly permits the landlord “to change the arrangement and/or location” of the common areas of the shopping center.
(emphasis added)
[112] I conclude that there is no evidence of an intention, nor clear and unambiguous language, in the 2016 Amendment removing Metro’s Parking Area rights (use of or number of parking spots and related common areas) as set out in the 1971 Lease As Amended by the 1983 Amendment.
Commercially Unreasonable
[113] I reject the submission of Metro’s interpretation that it has a proprietary right in the Parking Area and common areas is “commercially unreasonable” just because it limits what the Landlord can do on its property (para. 42 of Embee’s factum). Embee itself has limited what it can do on this very property as can be seen from the following statement by Embee:
This is illustrated by the LCBO Lease recently executed by Embee and the LCBO, which provides in relevant part: “The Landlord shall not make any changes to the site plan of the Shopping Centre as described herein without the Tenant’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.”
(emphasis added)
See para. 40 of Embee’s Factum and the Embee/LCBO Offer to Lease dated September 15, 2021.
[114] A limitation as to the Landlord’s right to alter the Parking Area or to add new buildings to the Property (whether to, the degree to, to what extent to, and with what approvals/consents), are the subject of negotiation and inclusion into a lease.
[115] Accordingly, limiting what a landlord can do on its property is not, simply by virtue of a limitation, commercially unreasonable.
Rejection of laches and limitation period submissions
[116] Embee alleges that, if estoppel is not applicable, Metro’s claim is barred by both statue and the doctrine of laches.
[117] The fallacy of these submissions is evident. Metro is not trying to increase the number of parking spots to 215 from the number of parking spots it agreed to or acquiesced to in the past. Metro seeks to enforce its current rights to the Parking Area , common area rights and current number of parking spots under the 1971 Lease As Amended.
[118] To accede to this submission would allow Embee to point to minor parking spot breaches in the past that Metro acquiesced to and permit Embee to do as it pleases to the entire Parking Area and common areas because claims for those minor breaches were delayed or are statute-barred. That result would be absurd.
Delay in bringing this Application
[119] Embee also alleges that Metro is delayed in bringing this Application from the time it heard Embee’s intention to construct the LCBO.
[120] I reject this submission. First, Embee failed to tell Metro of the existence and status of Embee’s negotiations (going back to 2018) and the lease with LCBO until December 2021. By that time, Embee and LCBO already had an Offer to Lease executed dated September 15, 2021. Second, Embee waited more than a month to respond to Metro’s objection to the LCBO store (January 31, 2022). Third, the Lease with LCBO was not disclosed until this proceeding. And even then, changes were made to the LCBO Lease Site Plan, such as to add parking spots at the rear of the shopping center (changed on May 2, 2022) to increase the number of parking spots and to eliminate exclusive LCBO parking spots (changed on November 23, 2022). One of these revisions to the Site Plan, submitted to Mississauga for approval, occurred on May 2, 2022, the same day Metro commenced this Application. Fourth, Embee delayed the hearing on the merits, seeking instead to have the Application converted to an action. That motion was dismissed. Lastly, the matter was before the Mississauga Committee of Adjustment in March and April 2022. The Metro Application was commenced on May 2, 2022. I find no delay on Metro’s part.
[121] Embee points to construction contracts with trades, planning costs, future rental costs from LCBO, the increased value of the Center, and loss of potentially increased rental revenue from current and future tenants if the injunction sought is granted. In my view, Embee simply took a chance that Metro would not object to the LCBO project. Embee kept this information from Metro, the anchor tenant in this Shopping Center, despite the fact the discussions with LCBO went back years. And then, even when Embee knew of Metro’s objection, Embee chose to proceed with the municipal approvals. To allow Embee to now point to its own reliance and consequent damages arising from its own deliberate conduct in these circumstances would be unjust and inequitable.
Conclusion
[122] I am satisfied that this Application was appropriately brought under R. 14.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (under either R. 14.05(3)(d), R. 14.05(3)(e) or R. 14.05(3)(h).
[123] I conclude that the provisions of the Lease As Amended are unambiguous. Therefore, extraneous evidence or subsequent conduct is neither appropriate nor relevant to this court’s determination.
[124] There are no material facts preventing this court from determining the parties’ rights under the Lease As Amended.
[125] Metro continues to have leasehold rights, along with other tenants, in the Parking Areas to use those areas, including the entrances to the Shopping Center, and including the minimum number of parking spots (subject to what I state below regarding Metro’s limitation to seek to increase the number of parking spots beyond what exists today).
[126] Metro continues to have leasehold rights in the number of parking spots. However, such rights do not permit Metro to require Embee to provide 215 parking spots (rather than the 204 to 206) because of the limitation’s issue or Metro’s apparent implicit approval to the reduction.
[127] Accordingly, the LCBO development would breach Metro’s leasehold rights, as it would:
a) Reduce the size of the Parking Area;
b) Eliminate parking where the LCBO building is constructed, hence excluding use of that portion of the Parking Area by Metro and the other tenants;
c) Reduce the number of usable parking spots to Metro and the other tenants. The number of parking spots to which Metro is entitled must provide reasonable access to the retail stores of Metro and the other tenants. Creating the parking spots at the rear of the Shopping Center undoubtedly makes the proposed parking spots virtually unusable and impractical. While I am not suggesting that Metro has control over the parking spot layout, it continues to have its rights to reasonable parking spots (of the 204 or 206 currently available to it); and
d) Eliminates the reasonable use of the one entrance (west entrance to King St.) for reasonably accessing the Shopping Center.
[128] Accordingly, I find that the proposed LCBO development would breach the Lease As Amended.
Estoppel
[129] Before estoppel will apply, a party must show:
a) That the other party did more than merely tolerate deviations from the term(s) of an agreement; and
b) Evidence that the conduct of the other party constituted an unambiguous promise or assurance that they would not rely upon or seek to enforce a term(s) of the agreement; and
c) That the first party intended that the legal relations created by the agreement to the extent of that term(s) would be altered.
See John Burrows Ltd. v. Subsurface Surveys Ltd. et al., 1968 81 (SCC), [1968] SCR 607 (“John Burrows”) at paras. 22 – 23; and Marble Trend Ltd. v. Sir Wynne - Highlands Inc., 2005 CaswellOnt 4103 (C.A.) at para. 3.
[130] Estoppel is also described as follows: the party seeking to rely on estoppel must establish evidence of a clear and unequivocal representations intended by the maker to the point that it would be unjust or unconscionable to allow the other party to enforce its strict legal rights. See Vision West Development Ltd. v. McIvor Properties Ltd., 2012 BCSC 302 at paras. 65-67.
[131] The Supreme Court of Canada stated in John Burrows that there must be evidence that one of the parties made representations or entered into a course of negotiations which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced. In John Burrows, the plaintiff had accepted a series of late payments from the defendant without objection but, when a payment was 36 days late, claimed the whole amount due under a promissory note. The Supreme Court of Canada concluded that the mere fact that one party had taken advantage of indulgences granted to him by the other would be insufficient to ground an estoppel claim.
[132] In Vancouver City Savings Credit Union v. New Town Investments Inc., 2008 BCSC 1617, the tenant and landlord were deadlocked on the form of a renewal lease. The court held at para. 26 that “the Estoppel Certificate cannot have the effect of altering the terms of the Lease.” See also:
Credit Union Central of Ontario Ltd. v. York Region Condominium Corporation No. 889, 2004 10633 (ON SC);
2454 Bloor Street West Ltd. v. Moksha Yoga Studio, 2013 ONSC 6501; and
6056628 Canada Inc. v. 2350894 Ontario Inc., 2019 ONSC 4523.
[133] An entire agreement clause, while not an absolute bar to the application of estoppel, is, depending on the circumstances, a significant factor in determining whether estoppel by conduct applies.
[134] Even when estoppel is established, it is not an estoppel against the enforcement of all of the agreement’s terms. In other words, the remaining terms of the agreement remain enforceable. Estoppel will only prevent enforcement of the varied term of the agreement by the course of conduct. For example, in this case the ability of Metro to enforce its rights to 215 parking spots.
[135] Lastly, estoppel is an equitable remedy engaging the court’s discretionary jurisdiction.
Does estoppel apply?
[136] Embee submits that prior course of conduct (Metro’s failure to object) with respect to the changes to the Parking Area or minimum number of parking spots now gives Embee the right to develop the Property, and in particular the Parking Area, as it sees fit.
[137] I disagree.
a) Essentially, Embee seeks to now expand rights that the 1971 Lease As Amended did not grant to Embee and which were not the subject of the minor parking spot variations that Metro did not object to. Those same references to other third-party leases on other properties now work against Embee as the parties specifically addressed whether and what the landlord could or could not do with respect to the common areas (as Embee has done with LCBO in this case). I do not accept that minor changes or deviations, essentially indulgences by Metro, throughout the past 50 years now eliminates the express proprietary rights granted in the Lease As Amended to give Embee the right to develop its Property, more specifically, the Common Areas and Parking Area, as it sees fit.
b) There is no evidence that Metro’s course of conduct was clear and unambiguous that Metro intended to or agreed to cancel its proprietary rights to the Parking Area and the minimum number of parking spots and common area rights such as the entrance ways.
c) There is no evidence that Embee relied on these minor changes over the years to its detriment. Embee confirms that it has made no changes to the Parking Area since it acquired the Property in 2000.
d) There is no cogent, rational or exceptional reason why the subsequent conduct, which is generally inadmissible, would be used to alter or amend the terms of the 1971 Lease As Amended. This is particularly so, given the entire agreement clause which continues to be a term of the Lease As Amended.
e) As estoppel is an equitable remedy, if necessary, this court would not exercise its discretion to permit the application of estoppel in the circumstances of this case. In my view, acceding to this submission would result in an unjust and inequitable situation.
[138] I conclude that Metro’s failure to object to the small reduction of parking spots over the years and the alteration pre-2000 to the Parking Area does not permit Embee to use estoppel to abrogate all of Metro’s proprietary rights in the Parking Area, common areas, or minimum parking spots. Estoppel would prevent Metro from enforcing its proprietary rights under the Lease As Amended to return to 215 parking spots from the 204 or 206 or to insist that Embee return the Parking Area to 107,688 square feet (as set out in the 1983 Amendment) from the 102,000 square feet that has existed since the pre-2000 renovation.
Estoppel Certificate
[139] Embee also points to the Estoppel Certificate as evidence that Metro acquiesced or agreed that it had no rights to the Parking Area or number of parking spots.
[140] I reject this submission. There are several problems with this submission by Embee:
a) The 2016 Amendment amended, continued and the defined terms with the same meanings as in the 1971 Lease.
b) There is no clear and unambiguous term in the Estoppel Certificate that Metro had given up or gave up its “rights” to the Parking Area or the number of parking spots. At best, the Estoppel Certificate acknowledges that the Landlord was not in default. Much clearer language in the Estoppel Certificate would have been required to achieve what Embee now seeks to read into it.
c) The Estoppel Certificate expressly goes on to state that the terms of the 1971 Lease As Amended remained in full force and effect. This would have made it clear that Metro had been granted rights to the “Leased Premises” which included the Parking Area, parking spots and common areas.
d) The reduction of 215 parking spots to 204 or 206 parking spots are not at issue in this Application. Metro is not seeking to increase the number of parking spots, either to the number in the 1971 Lease, the 1983 Amendment, or from the number of parking spots prior to the small reduction in 2016.
e) There is an entire agreement clause requiring any amendments, to be valid, to be in writing and signed by the parties. No such amendment, in writing and signed by both parties, exists. The Estoppel Certificate does not constitute such an amendment.
f) Embee essentially seeks to use a generic estoppel certificate, not to defend against any claim by Metro to regain prior unobjected to variations or indulgences, but to permit Embee to amend the Lease As Amended to deprive Metro of express proprietary rights given to Metro in 1971 and in 1983 and not expressly taken away in the 2016 Amendment or the Estoppel Certificate.
g) Embee relies on the “no default” provision of the Estoppel Certificate to permit Embee to make further and additional substantial changes to the Parking Area and relocation of parking spots, depriving Metro from entering or using parts of the Parking Area because of a proposed new LCBO building. If Embee were to succeed on this submission, Embee could put the LCBO building (or even a larger building) anywhere in the Parking Area with impunity!
h) Lastly, what would the consideration have been to Metro for any de facto amendment to the Lease giving up its proprietary rights? There was none. See Combe v. Combe, [1951] 2 K.B. 215 (CA) and Central London Property Trust Ltd. v. High Trees House Ltd., [1947] K.B. 130.
[141] I am not persuaded that the Estoppel Certificate altered the rights and obligations between the parties in the 1971 Lease As Amended. It did not eliminate Metro’s proprietary rights so as to permit Embee to construct a new building on the Parking Area or to alter the current ingress/egress to the Shopping Center parking lot or to remove reasonable and practical parking spots to be replaced with parking spots located in an unreasonable area of the Common Area.
Should a Declaration be Granted?
[142] Having concluded that Metro has proprietary rights to the Parking Area, as it presently is situated, and to the number of parking spots currently in place, I see no reason why a declaration as sought should not be granted.
[143] So, ordered as follows:
THIS COURT ORDERS AND DECLARES that the construction of the “proposed LCBO” as shown on the Proposed Site Plan dated November 25, 2021 (“Proposed Site Plan”), as subsequently amended by the Respondent, on the 102,000 square foot Parking Area of the Shopping Center at 2550 Hurontario Street, Mississauga, Ontario to the southeast of the Respondent’s supermarket, the reconfiguration involving the westerly King St. entrance to the Respondent’s property; and the proposed reconfiguration of the parking spot locations, would all constitute a breach of the Applicant’s proprietary rights under the Lease dated July 14, 1971, as amended on March 1, 1983 and further amended on September 7, 2016.
Should a Permanent Injunction be Granted?
Embee’s Position
[144] Embee submits that, even if the LCBO development were to constitute a breach of the Lease As Amended, granting the permanent injunction is not an appropriate remedy.
[145] Embee submits that:
i. There is an adequate alternative remedy; and
ii. Equitable considerations favour not granting a permanent injunction.
A Contractual Breach or an Interference with a Proprietary Interest?
[146] Embee’s authorities rely heavily on injunctions relating to a breach of contract.
[147] In my view, there is a distinction between seeking an injunction for a breach of contract and seeking one to restrain a derogation of a proprietary interest. The courts more readily grant injunctions to prevent the breach of a proprietary interest.
[148] There is no doubt that Metro has a proprietary interest in the Parking Area, having been granted the right to use the Parking Area by the then Landlord in 1971, continued in 1983, and then continued by Embee in 2016.
[149] Metro was granted the right for it and its customers (and those of other tenants) to use the Parking Area, including the entrances, to ingress and egress from the shopping center, to drive on the Parking Area, park on the Parking Area and use the Parking Area (and parking spots) to frequent the shopping center. That is an easement. That is a proprietary interest.
[150] Metro’s rights to use the Parking Area is a proprietary interest – a leasehold interest having been given to it for the “peaceful enjoyment and possession of the Leased Premises” (para. 3, 1971 Lease) which was defined to include the “rights in the Mall and Parking Areas” and that “all parking area now or hereafter developed in the Center shall be kept reasonably available by the Lessor for the free parking of automobiles for customers or persons doing business in the Centre, and no person shall be permitted by the Lessor to park motor vehicles thereon except for the purpose and to the extent aforesaid” (para. 30, 1971 Lease).
[151] The authorities Embee relied on are distinguishable. In 456559 B.C. Ltd. v. Cactus Café et al., 2000 BCSC 1652, the issue was whether the lease, which provided that the tenant would have “parking with egress and ingress,” created a proprietary interest: see para. 21. The court held that it did not. That differs from the case at bar, where Embee’s predecessor expressly granted Metro rights, as part of the Leased Premises, to include the right to use a defined Parking Area with a minimum number of parking spots, and entrances to the Shopping Center, which rights would be substantially altered by the LCBO development.
[152] Embee also relies on Good Life Corporation v. Hazeldean Properties Inc., 2008 ONCA 742. The landlord had granted Good Life use of parking spaces. The Landlord granted, to other tenants, exclusive use parking spots. The court concluded at para. 15 that:
If Good Life wanted to ensure access, specifically, to all of the individual parking spaces in the parking area, as opposed to the parking lot generally, it was incumbent on Good Life to specify accordingly in the lease. Similarly, if Good Life wished to prevent the landlord from granting reserved spaces anywhere in the parking lot to other tenants, it should have negotiated for the inclusion of such a clause in the lease.
[153] Neither authority stands for the proposition that a tenant’s leasehold rights under its Lease are solely contractual. The law is clear that a tenant’s interests under a written lease are also proprietary.
[154] In Highway Properties Ltd. v. Kelly, Douglas & Co. Ltd., 1971 123 (SCC), [1971] SCR 562 at para. 27, the Supreme Court confirmed that a commercial lease is a proprietary conveyance and also a contract.
[155] Professor Williams, in The Canadian Law of Landlord and Tenant (4th ed. 1973) at p. 1 states, with reference to a lease:
It is more than a mere contract, as it vests in the tenant taking possession an estate or interest in the land or premises demised.
and at p. 5:
A lease is much more than a contract. It creates and vests in the lessee an estate or interest in the land, a chattel interest, it is true, but a vested estate or interest none the less: Cricklewood Property etc. Ltd. v. Leighton's Inv. Trust Ltd., [1945] A.C. 221 at 233, [1945] 1 All E.R. 252, where it is pointed out that this has long been recognized and that in England the creation by a lease of an estate in land is now a matter of statute law: Law of Property Act, 1925 (U.K.), c. 20, s. 1(1)and s. 205(1).
(emphasis added)
[156] In Ontario, the Conveyancing and Law of Property Act, R.S.O. 1990, c. c.34 expressly includes a “lessee” as a “purchaser” of interests in lands (see definitions under s. 1), and s. 23 expressly includes conditions to be implied into every lease.
[157] Megarry and Wade, Law of Real Property (3rd. ed. 1966) at p. 45 states:
In early times, when leaseholds were regarded as mere contractual rights to occupy land, they were hardly estates at all. But in time, when the law came to give them full protection as proprietary interests, they were added to the list of recognized estates.
also says at p. 11:
Leaseholds are still, therefore, personality in law. But having now for so long been recognized as interests in land and not merely contractual rights, they have been classed under the paradoxical heading of 'chattels real'.
(emphasis added)
[158] McRuer C.J.H.C., in Lippman et al. v. Lee Yick et al., 1953 111 (ON SC), [1953] O.R. 514 at p. 523, [1953] 3 D.L.R. 527 quoted Blackstone, as follows:
A lease, an assignment of a lease or an underlease is not only a contract between the parties but it necessarily creates an interest or an estate in land (2 Bl. Com. 317).
[159] To suggest a lease does not create a proprietary interest is entirely without merit. Accordingly, the submission that the court should approach the claim for a permanent injunction solely as a breach of contract claim is rejected.
Negative or mandatory injunction?
[160] Embee submits that what is sought is a mandatory permanent injunction, which courts are more reluctant to grant.
[161] I disagree.
[162] What is sought is an injunction to prevent Embee from disregarding and reducing Metro’s proprietary rights by Embee’s LCBO development, the result of which would be to deprive Metro of its right to the use of a portion of the Parking Area and removing the 36 parking spots on that area, and altering the entranceway on King St. to make it essentially difficult to access the retail stores, including the Supermarket.
[163] This is a prohibitory injunction.
The Law
Permanent injunctions for breach of contract
[164] Embee submits that a permanent injunction is one granted after the determination of a party’s substantive claim. Here Metro’s claim to its proprietary rights under the Lease As Amended have been fully determined.
[165] As set out above, the declaratory order is to issue.
[166] Embee also relies on the following summary from Labourers' International Union of North America, Local 183 v. Castellano, 2020 ONCA 71 at para. 25, which sets out the approach for permanent injunctions as applied to a breach of contract (a collective agreement in Labourers’):
(i) Has the claimant proven that all the elements of a cause of action have been established or threatened?
(ii) Has the claimant established to the satisfaction of the court that the wrong(s) that have been proven are sufficiently likely to occur or recur in the future that it is appropriate for the court to exercise the equitable jurisdiction of the court to grant an injunction?
(iii) Is there an adequate alternate remedy, other than an injunction, that will provide reasonably sufficient protection against the threat of the continued occurrence of the wrong?
(iv) If not, are there any applicable equitable discretionary considerations (such as clean hands, laches, acquiescence or hardship) affecting the claimant's prima facie entitlement to an injunction that would justify nevertheless denying that remedy?
(v) If not (or the identified discretionary considerations are not sufficient to justify denial of the remedy), are there any terms that should be imposed on the claimant as a condition of being granted the injunction?
(vi) In any event, where an injunction has been determined to be justified, what should the scope of the terms of the injunction be so as to ensure that only actions or persons are enjoined that are necessary to provide an adequate remedy for the wrong that has been proven or threatened or to effect compliance with its intent?
[167] There is a distinction between the test for an interlocutory injunction and the test for a permanent injunction. Irreparable harm and balance of convenience are less important when considering whether to grant a permanent injunction. In 1711811 Ontario Ltd. (AdLine) v. Buckley Insurance Brokers Ltd., 2014 ONCA 125 at paras. 79-80, the Court of Appeal distinguished the test for a permanent injunction as opposed to an interlocutory injunction:
[79] In paras. 27-28 of Cambie Surgeries, Groberman J.A. explained:
Neither the usual nor the modified test discussed in RJR-MacDonald has application when a court is making a final (as opposed to interlocutory) determination as to whether an injunction should be granted. The issues of irreparable harm and balance of convenience are relevant to interlocutory injunctions precisely because the court does not, on such applications, have the ability to finally determine the matter in issue. A court considering an application for a final injunction, on the other hand, will fully evaluate the legal rights of the parties.
In order to obtain final injunctive relief, a party is required to establish its legal rights. The court must then determine whether an injunction is an appropriate remedy. Irreparable harm and balance of convenience are not, per se, relevant to the granting of a final injunction, though some of the evidence that a court would use to evaluate those issues on an interlocutory injunction application might also be considered in evaluating whether the court ought to exercise its discretion to grant final injunctive relief.
[80] I would adopt this reasoning….
(emphasis added)
Quia timet injunction
[168] Here, Metro seeks a quia timet injunction — an injunction to prevent threatened activity that has not yet come to pass.
[169] In this case, there is no doubt that, absent an injunction from this court, Embee will proceed with constructing the LCBO on January 9, 2023 (as advised by Embee’s counsel).
[170] Damages are usually not an appropriate remedy where a negative covenant is being breached because the purpose of the covenant is to prevent parties from committing breaches, not to require them to pay damages for committing the breaches. See McDonald's Restaurants of Canada Ltd. v. West Edmonton Mall Ltd., 1994 9040 (AB KB), [1994] A.J. No. 634 (QL), 10 W.W.R. 662 (Q.B.) at para. 82.
[171] Damages are, in the context of certain injunctions, a relevant consideration, but they have become less significant in favour of a consideration of what is the most just and equitable remedy. In Injunctions and Specific Performance (Toronto: Canada Law Book, looseleaf, 2022) by the Honourable Justice Robert Sharpe, at section 1.20, he states the following:
Where the harm to the plaintiff has yet to occur the problems of prediction are encountered. Here, the plaintiff sues quia timet—because he or she fears—and the judgment as to the propriety of injunctive relief must be made without the advantage of actual evidence as to the nature of harm inflicted on the plaintiff. The court is asked to predict that harm will occur in the future and that the harm is of a type that ought to be prevented by injunction. Thus, while all injunctions involve predicting the future, the label quia timet and the problem of prematurity relate to the situation where the difficulties of prediction are more acute in that the plaintiff is asking for injunctive relief before any of the harm to be prevented by the injunction has been suffered.
The jurisdiction to award quia timet injunctions is undoubted. It is said to be “an illustration of the rule that prevention is better than cure” especially where the cure in the form of damages may be uncertain and the courts have extolled their preventive function:
No part of the jurisdiction of the old Court of Chancery was considered more valuable than that exercise of jurisdiction which prevented material injury being inflicted, and no subject was more frequently the cause of bills for injunction than the class of cases which were brought to restrain threatened injury as distinguished from injury which was already accomplished.
(emphasis added; citations omitted)
At s. 1.6 of Injunctions, Sharpe J. states:
The traditional rule is that an injunction will be granted only where damages would provide an inadequate remedy. The reason for this is largely historical. Injunctions are an equitable remedy and the pre-Judicature Act dual-court structure imposed limitations on equitable jurisdiction. While the “common” injunction was used as a potent device to force parties in common law actions to abide by equitable principles, common law remedies remained predominant and the specific remedies of injunction and specific performance were limited to those special circumstances where the common law remedy of damages was seen to be inadequate. Law and equity have been fused and a single court now administers both, but the imprint of history has not been erased.
It is not possible to define inadequacy of damages in a precise way. It is a vague principle which takes shape depending upon the context. It means one thing when used with respect to interlocutory injunctions, another in nuisance actions and still another where an injunction is sought to restrain a breach of contract.
Indeed, as seen in §§ 4:1 et seq. and § 9:1 et seq. respectively, where injunctions are sought to restrain interference with property rights or to restrain breach of negative covenants, injunctions are in fact so strongly favoured that it is more accurate to say that the injunction is the presumed remedy. Because the phrase “inadequacy of damages” has varying meaning in varying contexts, detailed discussion of its effect is best postponed and presented in the various chapters dealing with these particular applications of specific relief.
It can be argued that the historical rationale for the inadequacy of damages principle, to the extent that it implies a presumption in favour of one remedy or another, has long since disappeared and that an effort should now be made to explain the choice between injunction or damages in more satisfactory terms. A “non-hierarchical” scheme governing the selection of remedies, dependent upon the relative advantages and disadvantages of each in the given substantive law context, with no presumptions favouring one remedy over the other, is to be preferred. It is suggested that the discussion in various parts of this book of the treatment of inadequacy of damages leads to the conclusion that, despite the continued use of the traditional language of the pre-Judicature Act system, these jurisdictional constraints removed more than 100 years ago have less influence than the language would suggest. As is the case with specific performance, in deciding whether to grant injunctions, modern courts are less and less willing to be bound by tradition alone, and more and more willing to base their decisions on the relative advantages and disadvantages of damages or an injunction. The courts do seem to be moving steadily closer to a “non-hierarchical” scheme of remedy selection. History and the traditional hierarchy are replaced by principle and pragmatism. A context specific determination of the advantages and disadvantages of damages on the one hand or injunctive relief on the other allows the court to select the remedy that best fits the right that is to be protected or vindicated.
(emphasis added; citations omitted)
[172] This suggested approach was cited with approval in King v. Chapman, 2012 MBQB 189, 282 Man. R. (2d) 67, 219 A.C.W.S. (3d) 86 (Man. Q.B.), at para. 18; aff’d in 2012 MBCA 112, 564 W.A.C. 77, 288 Man. R. (2d) 77 (Man. C.A.); with leave to appeal refused in 2013 CarswellMan 336, 2013 CarswellMan 337 (S.C.C.).
[173] In any event, where the permanent injunction sought is to protect a proprietary interest being or about to be breached, a permanent injunction is the presumptive remedy.
[174] In 1465152 Ontario Ltd. v. Amexon Development Inc., 2015 ONCA 86 (leave to SCC dismissed 2015 38341) applied the same rationale for granting an injunction to protect a tenant’s proprietary interest:
22 First, the Landlord contends that in Pointe East Windsor Ltd. v. Windsor (City), 2014 ONCA 467, [374 D.L.R. (4th) 380] (Ont. C.A.), at para. 17, this court held that equitable relief, such as a permanent injunction, is only available where damages are an inadequate remedy. The Landlord submits that the leased premises are not unique, so an award of compensatory damages to the Tenant would serve as an adequate remedy. However, in Pointe East Windsor Limited, the issue of remedy arose in the context of an action for breach of contract, not where the holder of an interest in property, such as the Tenant, was alleging a wrongful interference with a proprietary interest.
23 As the law in Ontario currently stands, different considerations apply in the latter circumstance, as was explained in Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf (consulted on 30 January 2015), (Toronto: Canada Law Book, 2014), at 4.10 and 4.20:
Where the plaintiff complains of an interference with property rights, injunctive relief is strongly favored. This is especially so in the case of direct infringement in the nature of trespass.
The reason for the primacy of injunctive relief is that an injunction more accurately reflects the substantive definition of property than does a damages award. It is the very essence of the concept of property that the owner should not be deprived without consent. An injunction brings to bear coercive powers to vindicate that right. Compensatory damages for a continuous and wrongful interference with a property interest offers only limited protection in that the plaintiff is, in effect, deprived of property without consent at an objectively determined price. Special justification is required for damages rather than an injunction if the principle of autonomous control over property is to be preserved. A damages award rather than an injunction permits the defendant to carry on interfering with the plaintiff's property. [Footnotes omitted.]
27 Finally, the Landlord submits that the permanent injunction constituted a disproportionate remedy in the circumstances, arguing that it was unreasonable to permit the Tenant to continue to occupy premises which amounted to less than three per cent of the building's total rental area when all other tenants had vacated the building. I would not accept that submission for two reasons. First, as pointed out in Injunctions and Specific Performance, at 4.590:
Where there is a direct interference with the plaintiff's property constituting a trespass, the rule favoring injunctive relief is even stronger than in the nuisance cases. Especially where the trespass is deliberate and continuing, it is ordinarily difficult to justify the denial of a prohibitive injunction. A damages award in such circumstances amounts to an expropriation without legislative sanction ... In trespass, there has been less concern than in nuisance with the problem of "extortion". Even if the plaintiff is merely holding out for the highest possible price, and suffers no out-of-pocket loss because of the trespass, the courts have awarded injunctions. Such orders may be said to vindicate the plaintiff's right to exploit the property for whatever it is worth to the defendant and prevent the defendant from circumventing the bargaining process. [Footnotes omitted.]
(emphasis added)
[175] A similar conclusion that an injunction is the preferred remedy when a landlord interferes with propriety interests was arrived at in Bloor Street Diner v. The Manufacturers Life, 2016 ONSC 440:
[65] Injunctive relief is strongly favoured where there is an interference with property rights:
Where property rights are concerned, it is almost that damages are presumed inadequate and an injunction to restrain continuation of the wrong is the usual remedy. … The reason for the primacy of injunctive relief is that an injunction more accurately reflects the substantive definition of property than does a damages award. It is the very essence of the concept of property that the owner should not be deprived without consent (see: Robert J. Sharpe Injunctions and Specific Performance (Toronto: Canada Law Book, 2014).
[66] Where a tenant alleges wrongful interference with a proprietary interest, an injunction is the preferred remedy (see: 1465152 Ontario Ld. V. Amexon Development Inc., 2015 ONCA 86).
[67] Although Manulife submits that BSDL’s loss is only material, the construction will not only result in a material loss in revenues, it will undermine BSDL’s ability to offer patrons an enjoyable dining experience and will threaten the viability of BSDL’s other businesses at the Manulife Centre.
[68] Manulife’s current construction plans amount to trespass on the leased premises. This fact further favours an injunction, as opposed to damages, as the appropriate remedy:
Where there is a direct interference with the Plaintiff’s property constituting a trespass, the rule favouring injunctive relief is even stronger than in the nuisance cases. Especially where the trespass is deliberate and continuing, it is ordinarily difficult to justify the denial of a prohibitive injunction. A damages award in such circumstances amounts to an expropriation without legislative sanction (Sharpe, supra).
[69] Injunctive relief is also the preferred remedy for breaches of a negative covenant. Damages are presumptively inadequate. It is much more difficult to measure the value of the impact of the offending party when it does something it promised not to do.
[176] Embee suggests this is not a trespass case because “Metro’s customers just can’t use it [referring to the LCBO building area].” I do not accept that distinction. Embee is the party trespassing to construct a building on the easement or proprietary interests of Metro under the 1971 Lease As Amended. In any event, there is no reason why an injunction to prevent a trespass would be treated in law any differently that an injunction to prevent a breach of a proprietary right.
[177] I accept that when a party is seeking to prevent another party from breaching or acting to derogate the party’s proprietary rights, an injunction is the presumptive remedy absent “special justification” or exceptional circumstances.
[178] There is a consistency that a declaratory order (as made in this case) results in injunctive relief rather than allowing the party to proceed to breach those proprietary rights of the tenant even where damages might be reasonably calculable. Damages at a future date, even if they could be assess adequately, would be a less effective and less equitable remedy.
[179] If this were the state of the law, then an injunction would become a much less effective judicial tool to prevent future breaches, especially when it comes to the disregard of proprietary rights. What would stop a landlord from deliberately ignoring its leasehold obligations because it believes that its financial rewards will outweigh the potential damages to the tenant whose rights are to be disregarded if and when such damages are assessed? If that were the case a landlord could, with impunity disregard tenants’ rights under leases such as tearing down the leased property to erect a condominium tower.
[180] When considering what is just and equitable, the fact that this is a prospective breach of a leasehold proprietary interest means that an injunction is the presumptive remedy absent “special justification” (wording used by Sharpe J.) or exceptional circumstances. In such a case, the party seeking to avoid the injunction ought to bear the onus.
[181] In any event, I am not persuaded that damages would be an adequate remedy in this case for the reasons set out below.
[182] Embee claims that there are other equitable factors that militate against granting an injunction. Essentially, it repeats the same arguments. One of the authorities Embee relied on, North West Company Inc. v. Delcon Property Company Ltd., 2008 ABQB 342, deserves a comment. In that case, at the interlocutory stage, the court was left with uncertainty over whether the provisions in the lease prohibited the activity in question. That is not this case.
[183] Embee alleges that a permanent injunction will impose substantial hardship on it. For the reasons set out above, Embee put itself in this situation and should not be able to complain about the costs or damages it will incur if the permanent injunction were to be granted.
[184] Besides, as stated above, I note that the LCBO can terminate the LCBO lease if the LCBO premises are not delivered by August 1, 2023. In that situation, the Offer to Lease becomes null and void and the parties would be relieved of all obligations thereunder. Accordingly, the damages to Embee are limited if the injunction is granted: its costs of proceeding to negotiate and obtain municipal approvals despite Metro’s objection.
[185] Essentially, Embee is complaining that it can make more money with the LCBO income as against the potential financial damages over the next 21 years to Metro.
[186] As I stated above, allowing this type of factor to enter into assessing grant the permanent injunction will allow landlords to consider their development options and financial rewards regardless of the prohibitions/terms of their tenants’ leases.
[187] In this case, Embee has not shown any reason for why a permanent injunction should not be granted.
Damages/alternative remedy
[188] This is the most substantive submission made by Embee to reject the injunction sought. Notwithstanding my conclusion that the permanent injunction should be granted to prevent a prospective breach of Metro’s proprietary right, I will deal with this issue as well. I conclude that in this case, damages are not reasonably identifiable and calculable. Hence, they are not a reasonably adequate remedy.
[189] The loss of actual or potential customers, a permanent loss of market share, or damage to business reputation have all been characterized as irreparable harm. In Precision Fine Papers Inc. v. Durkin, [2008] O.J. No. 703 (S.C.J.), the court stated at para. 25:
Cases of unfair competition have often been recognized as ones in which damages may not adequately compensate the plaintiff for the loss suffered due to the defendant’s conduct. Not only is it difficult to quantify the loss of goodwill or market share suffered by the plaintiff due to the defendant’s actions, but the damage to relationships with customers is inherently difficult to assess. In a competitive industry, where there can be considerable fluidity of customer allegiances, it may be difficult for the moving party to establish an accurate measure of damages.
[190] Embee submits that Metro’s damages can be quantified because it says that “any decrease in sales resulting from the addition of the LCBO can be tracked and measured.” This submission disregards the impact on Metro’s goodwill. It also disregards the difficult to assess, in the future, the reasons for a reduction or increase in customers or sales. There would be no way that the reasons why a customer chose to go to another supermarket could ever be identified, especially over a 21-year period. Was it parking restrictions? Was it changing demographics? What is the impact of the construction on customers, on whether they go to another store and whether they return later? What is the impact of increased traffic?
[191] Embee relies on an affidavit of Larry Andrade, a partner at Deloitte’s National Disputes practice. I agree with Mr. Andrade that what must be calculated are damages, which, “arising from an event/incident[,] [are] intended to put the injured party in the same financial position had the event or incident not occurred.”
[192] But the error Mr. Andrade makes is suggesting, like Embee, that all one had to do is review the Metro forecasted financial statements (if they even exist out 21 years) to compare the forecast to actual revenues. In my view, that is an incomplete damages analysis. A proper analysis will require the impact on goodwill, impact of the economy, other factors (like the recent COVID-19 pandemic), and proof of causation, that is, that the damages were caused by the loss of the use of the Parking Area and the loss of entrance ways. There will be many factors to consider, such as changing demographics, changes in population density, changes in competitors (location, type, and so on) and determinations of who Metro’s competitors are at any given point. As the forecasts go out beyond a year or two, they become less reliable. And the onus to prove damages would be on Metro despite the fact that Metro is not the party seeking to breach the Lease As Amended.
[193] The fact that sales may go up does not foreclose the possibility that sales would have gone up higher without the LCBO. If sales go down, how would Metro prove it was due to the reduction of the Parking Area/parking spots at this location?
[194] I am not satisfied that, with all of the uncertainties with a damage assessment over a long period of time, that damages can be reasonably assessed in the circumstances of this case. Accordingly, damages is not a reasonable alternative remedy.
CONCLUSION
[195] Granting an injunction is discretionary. Having determined that Metro’s proprietary rights under the Lease As Amended would be breached by Embee’s proposed construction of the LCBO, and the lack of any reasonable or equitable basis to deny Metro the permanent injunction it seeks, a permanent injunction should be granted.
[196] Accordingly, this court orders a permanent injunction as follows:
AND THIS COURT ORDER[S] THAT a permanent injunction is granted prohibiting [the] Respondent from:
a) interfering with [the] Applicant’s rights to use the entire parking area of approximately 102,000 square feet at 2550 Hurontario Street, Mississauga, Ontario, in common with other tenants; and
b) interfering with the Applicant’s rights to use the parking areas, roads, streets, drives, tunnels, passageways, landscaped areas, open and enclosed malls, exterior ramps, walks and arcades at 2550 Hurontario Street, Mississauga, Ontario; and
c) altering the Parking Area at 2550 Hurontario Street, Mississauga, Ontario in a manner so as to deprive the Applicant of its right to use the Parking Area, or any [p]art of it, for it and its customers[’] use; and
d) from reducing the number of parking spots at 2550 Hurontario Street, Mississauga, Ontario below 204 or 206 (the parties should be able to go and count them so an exact number can be used).
COSTS
[197] Metro has been successful. The parties agreed on costs of the Application being set at $60,000 all inclusive. Costs of $60,000 payable by Embee to Metro forthwith.
RSJ Ricchetti
Released: January 19, 2023
APPENDICES
Appendix A
Original Site Plan
Appendix B
Appendix C
SCHEDULE "B"
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Appendix E
COURT FILE NO.: CV-22-00001252-0000
DATE: 2023 01 19
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
METRO ONTARIO REAL ESTATE LIMITED
Applicant
- and -
EMBEE PROPERTIES LIMITED
Respondent
REASONS FOR JUDGMENT
RSJ Ricchetti
Released: January 19, 2023