2023 ONSC 6123

Court File and Parties

Court File No.: CV-21-00001307-0000 Date: 20231030

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Symmban Stroud Inc., Applicant AND: 20636999 Ontario Inc. O/A Dollar Bits and Discounts, Respondent

BEFORE: S WOODLEY J

COUNSEL: Alan B. Dryer, Counsel for the Applicant Harinder Dhaliwal, Counsel for the Respondent

HEARD: April 21, 2023

Reasons for Decision on Application

Overview

1This is a commercial lease dispute between the Applicant Symmban Stroud Inc. (the “Landlord”) and the Respondent 20636999 Ontario Inc. o/a Dollar Bits and Discounts (the “Tenant”).

2On January 1, 2017, the Tenant commenced operating a discount dollar store known as Dollar Bits and Discounts in a commercial plaza located in Innisfil, Ontario pursuant to a five-year Lease executed on October 12, 2016 (the “Lease”), between the Tenant and the former owner/landlord.

3On September 14, 2018, approximately two years following execution of the Lease, the Landlord purchased the commercial plaza from the former owner/landlord and assumed the rights and obligations of the owner/landlord under the terms of the Lease.

4Prior to purchase, the Lease was certified by an Estoppel Certificate delivered to the Landlord to be in full force and effect, to not have been amended, to be in good standing without default or breach by the Tenant or the Landlord.

5Following purchase, the Landlord made certain demands upon the Tenant which the Tenant alleges constituted an “ongoing campaign of harassment” that culminated in the Application to terminate the Tenant’s tenancy pursuant to Part III of the Commercial Tenancies Act and Sub-Rule 14.05(2) of the Rules of Civil Procedure.

Issues

[6] The issues to be determined are as follows: a. Can the issue of validity of the Option to Renew be determined by Application; and b. If so, is the Option to Renew valid?

Determination of Issues

[7] For the Reasons for Decision that follow, I find: a. The validity of the Option to Renew may be determined by application based on uncontested facts and reasonable inferences arising from the evidence. b. The Option to Renew contained in the Lease is valid.

Facts

8In or about September of 2016, the Tenant’s representative, Vijay Luthra, attended at a commercial plaza located in Innisfil for the purpose of determining whether certain premises located in the plaza were suitable for lease by the Tenant for the establishment of a discount retail dollar store.

9At that time, the premises were laying vacant and were divided into two units – one previously occupied by a Canada Post office and the other previously occupied by a Toronto Dominion Bank branch.

10The Tenant’s representative, Mr. Luthra, determined that the Tenant required the premises to be reconfigured from two units to one to suit the Tenant’s intended purpose. Mr. Luthra met and discussed with the former owner/landlord’s representative, Sukh Sandhu, the need and cost of demolishing and reconfiguring the premises to suit the Tenant’s needs.

11Mr. Luthra advised Mr. Sandhu that if the Tenant was going to lease the premises, they would require a lengthy lease in the range of 10-to-15-years to allow the Tenant to recoup the time and expense associated with the required renovations.

The Lease

12In or about October of 2016, the former owner/landlord’s representative Mr. Sandhu prepared a draft Lease and forwarded a copy to Mr. Luthra for review.

13The draft Lease, as prepared by Mr. Sandhu, provided for an initial five-year term with an Option to Renew for a further five-year term at a specified rental amount for a total lease period of 10 years.

14On or about October 12, 2016, Mr. Luthra and his accountant met with Mr. Sandhu at Mr. Sandhu’s office to finalize the terms of the Lease for the Subject Premises.

15After discussion, certain handwritten amendments were made to the Lease to provide for a second five-year term Option to Renew at a specified rental amount for a total lease period of 15 years.

16Following insertion of the handwritten amendments, Mr. Luthra as representative of the Tenant, and Mr. Sandhu as representative of the former owner/landlord, executed the Lease and initialed all handwritten amendments.

17No amendments of any kind were ever made to the Lease following execution.

18Pursuant to paragraph 9 of the Lease, the first day of the Lease term was January 1, 2017, and the last day of the Lease term was December 31, 2021.

19Paragraph 13 of the Lease dictates the terms of the Option to Renew as follows:

13. Term of Lease Five (5) years term from January 1, 2017 to Dec 31, 2022 and as per conditions in SCHEDULE “D”. There is one two (5) years’ term OPTION TO RENEW at the Net rent of $4,500/month + HST. & 2 ND FIVE YEAR TERM AT $5,150 + HST. Both Landlord (2384359 Ont. Inc.) and Tenant (2063699 Ont. Inc.) agrees that the period of January 1, 2017 – April 31, 2017; will be used as fixturing period in order to prepare the leased unit for the business and it is also rent-free period.

20The Tenant obtained possession of the Leased Premises on January 1, 2017, and there was no default or breach under the Lease by the Tenant or the former owner/landlord prior to the (current) Landlord’s purchase of the Leased Premises.

The Estoppel Certificate

21Approximately two years following the execution of the Lease, the former owner/landlord advised the Tenant that they were selling the Leased Premises.

22On or about August 8, 2018, the former owner/landlord requested that the Tenant execute a typewritten Tenant Estoppel Certificate, contemplated by Article 3, Section 3.5 of the Lease as follows:

Each of the Landlord and the Tenant agrees that it will at any time and from time to time upon not less than 10 days’ notice, execute and deliver to the other (and, if required, to any prospective purchaser or mortgagee of the Development) a certificate in writing as to the status at that time of this Lease, including as to whether this Lease is unmodified and in full force and effect (or, if modified, stating the modification and that the same is in full force and effect as modified), the amount of the Rent then being paid, whether or not there is any existing default on the part of the other of which it has notice, and any other matters pertaining to this Lease as to which the other shall request a statement. If any such certificate requested by the Landlord is not returned to the Landlord within 10 days after its request therefore, the Landlord shall have the right and is hereby appointed by the Tenant and its agent and attorney to prepare and execute such certificate.

23The Estoppel Certificate, as prepared by the former owner/landlord, was addressed to the Landlord (Symmban Group) regarding the Purchase of the Leased Premises and the existing “Lease” between the (then) owner/landlord and the Tenant.

24The Estoppel Certificate is a two-page typewritten document dated August 8, 2018, that was signed and dated by Mr. Luthra, but not witnessed.

25The Estoppel Certificate produced to the Court includes, on the face of page one of the two-page typewritten document - five handwritten notes.

26None of the handwritten notes appear to have been written by Mr. Luthra and none of the handwritten notes were initialed by Mr. Luthra.

[27] As is apparent from a cursory review of the Estoppel Certificate, the handwritten notes appear to have been added following execution by Mr. Luthra and do not appear to have been made in Mr. Luthra’s presence or at his direction. The evidence that supports this finding is as follows: a. There is a handwritten note scrawled across the top of the document that reads: “INCOMPLETE MISSING WITNESS”. Thus, evidencing that the notes were made following Mr. Luthra’s signature and not in his presence; otherwise, the person noting “incomplete missing witness” would simply have signed as a witness. b. The notes were all made by the same hand. c. None of the handwritten notes were initialed by Mr. Luthra – which is in stark contrast to the handwritten notes found on the Lease – all of which were initialed by Mr. Luthra and Mr. Sandhu.

28Invoking the court’s ability to make reasonable inferences based on the evidence filed, I find as a fact that the handwritten notes that appear on the face of page one of the typewritten Estoppel Certificate as produced to the Court were not present on the document when Mr. Luthra executed the document. Further, as such handwritten notes were not initialed by Mr. Luthra, they are not deemed to be accepted by him, and as such are of no force or effect in any event.

29Of further note, the handwritten note that appears on the face of the Estoppel Certificate that specifically references the Option to Renew appears to have been revised by hand following the insertion of the note on the Estoppel Certificate.

30Upon a cursory review of the Estoppel Certificate, it appears that the handwritten note originally read: “Option to Renew 2 Five Year”. This handwritten note appears to have been further revised by hand to read: “Option to Renew 1 five Year @ $4,500.00 ”. In other words, the number “2” was turned into a “1” and the rental amount “@ $4,500.00” was added after the original note was made.

31While this point is ultimately irrelevant given my finding that all handwritten notes were added after signature – and none were initialed by Mr. Luthra and are not binding upon him in any event - I find the specific handwritten revision/addition to be concerning considering the overall factual matrix.

32As for the accuracy of the Estoppel Certificate, by the terms of the Certificate, the Tenant certified to the Landlord that the Lease was in full force and effect and had not been amended and contains the entire agreement between the Landlord and the Tenant relating to the Premises and the Property.

33The certification by the Tenant, as contained in the Estoppel Certificate, is entirely accurate. No amendments were made to the Lease at any time following execution by the Tenant (Mr. Luthra) and the former owner/landlord (Mr. Sandhu).

34As for the effect of the Estoppel Certificate, I note that there are three paragraphs (2, 3, and 9) that invite the insertion of exceptions and yet no exceptions were typewritten onto the document executed by Mr. Luthra.

35The failure of the Estoppel Certificate to include exceptions where indicated is entirely consistent with the terms of the Lease governing the issuance of an Estoppel Certificate as found at Section 3.5, which states, in part, as follows:

…the Tenant agrees that it will at any time…execute and deliver…a certificate in writing as to the status at that time of this Lease, including as to whether this Lease is unmodified and in full force and effect (or, if modified, stating the modification and that the same is in full force and effect as modified), the amount of the Rent then being paid, whether or not there is any existing default on the part of the other of which it has notice, and any other matters pertaining to this Lease as to which the other shall request a Statement.

36As previously noted, the Lease was not amended following execution by the parties. As no modifications of any kind were made to the Lease following execution, as per Section 3.5 of the Lease, no modifications were to be noted as exceptions on the Estoppel Certificate.

[37] The Tenant’s obligations under the Lease to include and certify specific information by the Estoppel Certificate as required by Section 3.5 of the Lease was also met by the Tenant. The Estoppel Certificate, amongst other information, accurately certifies: a. the status of the Lease (in full force and effect and in good standing); b. the amount of rent then being paid ($4,520 including TMI and HST); c. the (then) current term of the lease (January 1, 2017 to December 31, 2021); and d. the fact that there was no existing breach or default.

The Positions of the Parties

[38] The Landlord submits that the Option to Renew provided by the Lease is void for uncertainty on the following grounds: (a) It fails to state which party to the Lease has the purported Option to Renew; (b) It fails to state what Lease terms will govern the purported renewal term, and that the rights and obligations of each party will be during the purported renewal term; (c) It fails to state whether there will be further purported options to renew; (d) It fails to state the manner in which such purported Option to Renew must be exercised, including: (i) the conditions under which it may be exercised; (ii) the time within which it may be exercised; and (iii) the manner in which any notice of its exercise is to be given.

39The Landlord further submits that as the Option to Renew is void for uncertainty the Tenant’s tenancy expired on December 31, 2021, and the Tenant has no valid right to renew or extend the Lease by any means, or on any ground, whatsoever.

40The Tenant submits that the Option to Renew as contained in the Lease is not uncertain but is clear and evident upon an ordinary reading of the Lease document.

41The Tenant submits that all terms relating to the Option to Renew were understood and agreed upon between the former owner/landlord and the Tenant upon execution of the Lease and if any portion of the Lease had been uncertain, such uncertainty could have been addressed as part of the Landlord’s due diligence prior to purchase of the Leased Premises.

42The Tenant further submits that the Landlord’s application is merely an orchestrated attempt to obtain a benefit that the Landlord is not otherwise entitled to receive – which is early termination of the Lease and possession of the Leased Premises.

Analysis and the Law

Issue #1: Ability to Determine the Issue by Application

43The first issue to be determined is whether the Court can determine the issue of the validity of the Option to Renew by application.

44The Landlord seeks to have the issue determined on the face of the record based on uncontroverted facts.

45The Tenant seeks to have the issue determined at trial.

46Part III of the Commercial Tenancies Act specifically provides for the issue to be heard and determined by Application by way of a specific statutory authority to do so, which is authorized to proceed under Rule 14.05(2) of the Rules of Civil Procedure. The specific statutory purpose and intent of Part III of the Commercial Tenancies Act is to have issues of this nature determined by way of application.

47In A.M. Machining Inc. v. Silverstone Marble & Granite Inc., 2010 ONSC 71, a landlord brought an application seeking to terminate a commercial tenancy and the tenant sought to convert the proceedings to a trial. The Court held that the hearing process under Part III of the Commercial Tenancies Act is intended to be summary and can be expanded into a viva voce hearing if the Judge considers it necessary. Where the court finds that: (a) there is a full evidentiary record, particularly the affidavit evidence of the landlord, on the basis which the order which was sought can be made; (b) the tenant has had full opportunity to put its best foot forward in the Part III proceedings and in the application; (c) the tenant had full opportunity to be heard and to defend on the merits; and (d) where if the matter were converted to an action the landlord would be entitled to bring a motion for summary judgment on the same material filed under Rule 20.04 as amended by subparagraph 2.1 which permits the court to weigh evidence, to evaluate the credibility of a deponent, and to draw any reasonable inference from the evidence, an application by the landlord under Part III of the Commercial Tenancies Act will not be converted into an action.

48Further, in OnTheGoShipping Inc. and Kwok-Wai Leung, aka Harry Leung v. G. Khan Medicine Professional Corporation, 2020 ONSC 2789, the Court found that Part III of the Commercial Tenancies Act gives the court broad powers to hear and resolve issues summarily. In that case, the Court was satisfied that the application power under Rule 14.05 was broad enough to fairly resolve the issue of the nature of the tenancy in the circumstances of the case. Even though there were credibility issues the judge was satisfied that the central issue of the nature of the tenancy could be resolved on the record provided, and there was no suggestion otherwise.

49Applications are commonly determined based on the written record even where there are factual matters in dispute, as provided by Rule 14.05(3)(h). It is only where there are “factual matters in dispute requiring a trial” that an application should not proceed on the written record.

50In the present case, I find that there are no “factual matters in dispute requiring a trial” that cannot be adequately resolved on the record provided drawing reasonable inferences from the evidence.

51As such, the issue of whether the Option to Renew as contained in the Lease is void for uncertainty is properly determinable by this application.

Issue #2: Is the Option to Renew/Estoppel Certificate Void for Uncertainty

[52] The Landlord submits that the Option to Renew purportedly provided by the Lease is void for uncertainty on the following grounds: (a) It fails to state which party to the Lease has the Option to Renew; (b) It fails to state what Lease terms will govern the renewal term, and that the rights and obligations of each party will be during the purported renewal term; (c) It fails to state whether there will be further options to renew; (d) It fails to state the manner in which such Option to Renew must be exercised, including: (i) the conditions under which it may be exercised; (ii) the time within which it may be exercised; and (iii) the manner in which any notice of its exercise is to be given.

53The Tenant submits that a contextual reading of the whole Lease demonstrates that the Option to Renew terms are certain, unambiguous, and enforceable by the Tenant.

Interpretation of Commercial Leases Generally

54In Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673, the Court of Appeal summarized the principles applicable to interpretation of commercial contracts as follows, at para. 16:

When interpreting a contract, the court aims to determine the intentions of the parties in accordance with the language used in the written document and presumes that the parties have intended what they have said. The Court construes the contract as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective. In interpreting the contract, the Court must have regard to the objective evidence of the “factual matrix” or context underlying the negotiation of the contract, but not the subjective evidence of the intention of the parties. The Court should interpret the contract so as to accord with sound commercial principles and good business sense and avoid commercial absurdity. If the Court finds that the contract is ambiguous, it may then resort to extrinsic evidence to clear up the ambiguity.

55It is also noted that any interpretation that would render one or more of the terms of the Lease ineffective should be avoided, if possible, as parties are presumed to intend what they have contracted.

56The objective evidence of the factual matrix underlying the negotiation of the contract must also be kept in mind without reference to the subjective evidence of the parties.

57Finally, the Lease must be interpreted with sound commercial principles and good business sense to avoid commercial absurdity, and only if the contract remains ambiguous must resort be had to extrinsic evidence to clear up any ambiguity.

(a) The Lease Fails to State which Party has the Option to Renew

58The Landlord submits that a renewal clause will be void if its terms are uncertain, and certainty must extend to the exercise of an option as well as the terms of the Lease.

59In the present case, the Landlord submits the identity of the party who has the right to exercise the option to renew is an essential term without which the renewal clause would be void for uncertainty.

60As per the Ontario Court of Appeal in Salah, it is necessary to review the whole of the Lease to determine the intent of the parties keeping in mind that parties are intended to mean what they have said.

61In the present case the initial draft Lease was prepared by the former owner/landlord and delivered to the Tenant prior to finalization. This draft Lease, at paragraph 13, contained ONE (5) Five years’ term OPTION TO RENEW.

62This term of the Lease found at paragraph 13, was hand-amended and initialed by all parties to the Lease to include a SECOND (5) five-year term upon execution of the final Lease.

63As is apparent from a review of the handwritten amendments to paragraph 13 of the Lease, the parties specifically intended that there would be TWO Options to Renew the terms of the Lease.

64On the face of the Lease, the terms are open such that either party may exercise the Option to Renew the Lease.

65However, the fact that the Lease does not specify which party has the option to renew does not, as suggested by the Landlord, result in uncertainty, or invalidate the Option to Renew.

66Considering the whole of the Lease and read in context applying sound commercial principles and good business sense, it is clearly the Tenant who has the Option to Renew.

67On a plain reading of the Lease, and more particularly paragraph 13 of the Lease, the availability of the Option to Renew is subject to compliance with Schedule “D” of the Lease.

68Schedule “D” of the Lease details the “Rules and Regulations” that govern the Tenant’s use and occupancy of the Leased Premises and apply only to the Tenant and not to the Landlord.

69Given that the Tenant must comply with Schedule “D” before the right to renew the Lease can be exercised, logic dictates that only the Tenant has the right to exercise the option.

70Otherwise, the Tenant could successfully preclude the Landlord from exercising the option by simply breaching any term contained in Schedule “D”.

71Conversely, accepting that the Tenant is the party with the right to exercise the option, the Lease provides that the Tenant may only exercise the option when compliant with Schedule “D”. This result makes perfect commercial sense as the condition that requires compliance with Schedule “D” protects the Landlord from allowing a defaulting Tenant the right to renew. However, where the Tenant is compliant, the Lease grants them the right to exercise the option to renew.

72There is no other reasonable inference that could be drawn from a review of the Lease. Any other interpretation would be illogical and would create a commercial absurdity.

(b) The Lease Fails to State what Terms Govern the Renewal Term, and the Rights and Obligations of each Party during the Renewal Term

73The Option to Renew as contained at paragraph 13 of the Lease does not exist in a vacuum and must be read in conjunction with the entirety of the Lease.

74There are no provisions in the Lease that revise, restrict, limit, or vary either of the parties’ rights and obligations upon renewal, except as specifically noted at paragraph 13 Option to Renew regarding the amount of rent payable during the renewal period.

75From a plain reading of the Lease, ALL terms of the Lease continue during the renewal term except as specifically amended as noted regarding the amount of rent payable during the period.

76The failure of the Lease to specifically recite that all existing rights and obligations of each party continue unless otherwise specifically amended during the renewal term does not render the Lease uncertain or void. The doctrine of contra proferentem relieves the Tenant from any responsibility under this suggested interpretation. See: Unique A T Holding Corp v. Bryson & Associates Insurance Brokers Ltd., 2000 CarswellOnt 4233 (S.C.J.).

(c) The Lease Fails to State Whether There Will be Further Options to Renew

77It is trite law that the courts will not enforce an “agreement to agree” and that there must be reasonable certainty as to the length of the term of a lease or of a renewal option. See: Mapleview-Veterans Drive Investments Inc. v. Papa Kerollus VI Inc, 2016 ONCA 93.

78The objective evidence establishes that the draft Lease was prepared by the former owner/landlord and presented to the Tenant and originally contained ONE Option to Renew for a five-year term.

79The objective evidence also establishes that prior to finalization and execution of the Lease, the parties agreed that there would be a SECOND five-year term Option to Renew.

80The agreement that there would be a SECOND five-year term Option to Renew is readily apparent on the face of the document as being hand inserted and initialed by all parties on the fully executed Lease.

81The executed Lease containing the SECOND five-year term Option to Renew was provided to the Landlord prior to purchase of the Leased Premises.

82The Estoppel Certificate dated August 8, 2018, which certifies that the Lease is in full force and effect and has not been amended, was also provided to the Landlord prior to the purchase of the Leased Premises.

83The fact that the Lease contains TWO Options to Renew is readily apparent on the face of the executed Lease provided to the Landlord prior to purchase.

84There is no ambiguity with respect to this issue.

(d) The Lease Fails to State the Manner in Which the Option to Renew Must be Exercised: (i) the conditions under which it may be exercised; (ii) the time within which it may be exercised; and (iii) the manner in which any notice of its exercise is to be given.

The Manner in Which the Option Must be Exercised Generally

85Some deficiency or lack of clarity in a lease renewal does not make it void for uncertainty and the court is reluctant to hold void for uncertainty any provision that was intended to have legal effect. See: Brown v. Gould and Others [1972] All E.R. 1505 (Ch.Div.) at p. 1507.

86The court aims to determine the intention of the parties and presumes that the parties have intended what they have said.

87Where ambiguity exists, the court should interpret a contract to accord with sound commercial principles and good business sense.

88Further, in the event ambiguity remains, the court may resort to extrinsic evidence to clear up the ambiguity. See: Salah at para. 16.

89It is trite law that there can be no right without a remedy. Where a right exists, a remedy must follow.

90In the present case, the evidence overwhelmingly establishes that the parties intended that the Lease contain TWO Options to Renew for the benefit of the Tenant.

91The Landlord argues that the failure of the Lease to specify the manner that the Option to Renew is to be exercised renders the Lease void for uncertainty.

92I disagree. The failure of the Lease to specify the manner that the Option to Renew does not render the Lease void. First, based on the reasonableness test, and second, based on contra proferentem.

The Reasonableness Test

93Where essential terms are absent, the court is entitled to inquire whether the essential terms of the contract can be determined with a reasonable degree of certainty arrived at from the perspective of an objective, reasonable bystander considering all the material facts. See: Cdn. Northern Shield v. 2421593 Canadian Inc., 2018 ONSC 3627, at para. 74.

i. The Conditions Under Which the Option May be Exercised

94The Lease provides that the original term of the Lease is from January 1, 2017 to December 31, 2021.

95Paragraph 13 of the Lease provides for TWO Options to Renew “as per the conditions in Schedule ‘D’” of the Lease, which Schedule details the Rules and Regulations applicable to the Tenant.

96On a plain reading of paragraph 13, it is my view that a reasonable bystander would find that the Tenant was entitled to exercise the Option to Renew as per the conditions in Schedule “D”, or in other words, on the condition that the Tenant had complied with the rules and regulations detailed at Schedule “D”.

97Similarly, on a plain reading of paragraph 13, I am of the view that a reasonable bystander would find that the Tenant would not be entitled to exercise the Option to Renew if the Tenant was in default or breach of the conditions at Schedule “D”.

98I do not find that any ambiguity exists regarding the conditions under which the option may be exercised.

ii. The Time Within Which the Option May be Exercised

99As to the timing of the exercise of the Option, in Guardian Realty Co. of Canada v. John Stark & Co., (1922), 64 S.C.R. 207, a case where a lease had an option to renew without specifying when and how it should be exercised, the Supreme Court of Canada held, at para. 3, that:

There is nothing restricting respondents to exercise said option within any specified time as usually is in the like cases of lease, and hence what is reasonable must be the limits of the right so existent.

100In Guardian, the Court held that the option could be exercised even after the lease expires, so long as the tenant remains in possession of the premises with the sanction of the landlord.

101In the present case, while the Tenant is in possession, such possession is only granted for the purpose of preserving the status quo while awaiting the within decision regarding the validity of the Option to renew. There is otherwise no “sanction” by the Landlord.

102In the present case, the Tenant’s continued possession is to preserve the status quo and not otherwise sanctioned by the Landlord. It is my view that reasonableness and common sense would require notification of the Tenant’s intent to exercise the first five-year term Option to Renew prior to end date of the Lease term.

103On a plain reading of paragraph 13 of the Lease, it is my view that a reasonable bystander would find that the Tenant could exercise the Option to Renew, if the Tenant were compliant with the conditions in Schedule “D”, and, if the Landlord received notification of the exercise of the Option prior to the end date of the Lease term.

104Similarly, also on a plain reading of paragraph 13 of the Lease and having regard to the fact that the Tenant remains in possession to preserve the status quo, it is my view that a reasonable bystander would find that the Tenant would not be entitled to exercise the Option to Renew if notification was provided following the end date of the Lease term, as the Lease would be spent and the Landlord would not have sanctioned the continued possession.

iii. The Manner in Which Notification May be Exercised

105As to the manner that the Tenant must provide notification, although verbal renewal is acceptable where notice of the verbal renewal was provided to a subsequent Landlord [1], in this case, notice in writing of the intent to exercise the Option to Renew was provided by the Tenant on two occasions in October of 2021 and December of 2021.

106It is my view that a reasonable bystander adhering to sound commercial principles and good business sense would provide notification to the Landlord either verbally or in writing. In the present case, the Tenant provided notice of the intent to exercise the Option to Renew in writing in October and December of 2021, prior to the end date of the term and fully satisfied any notice requirement.

The Applicability of the Contra Proferentem Rule of Contract Interpretation

107In addition to finding that the Option to Renew is not void for uncertainty based on the reasonable bystander test, I also find that the rule of contra proferentem is properly applicable to the facts of this case and would resolve any ambiguities in favour of the Tenant.

108The contra proferentem rule provides that where there is an ambiguity or contradiction in a contract that cannot be resolved by the other rules of construction, then resort may be had to the contra proferentem rule, which posits that the language of the contract will be construed against the party that inserted the provision to the other with no opportunity to modify its meaning. See: First Condo Group Ltd. V. Lloyd’s Underwriters, 2020 ONSC 146 at para. 24.

109The Lease was drafted by the former owner/landlord and was executed as drafted subject only to certain handwritten and initialed revisions including revisions to paragraph 13.

110The fact that the former owner/landlord included a FIRST Option to Renew in the draft Lease then inserted and initialed a SECOND Option to Renew in the final Lease provides independent objective evidence that the parties intended the Tenant to have the right to the Option to Renew for TWO further terms.

111As there can be no right without a remedy it would be inequitable and a commercial absurdity if the Tenant were unable to exercise the Option to Renew due to ambiguities or drafting errors created by the party who seeks to avoid the contract. [2]

112In the present case, to the extent that any ambiguity may exist with respect to the manner that the Option to Renew may be exercised, resort may be had to the contra proferentem rule, such that any language or omissions contained in the Lease will be construed against the party who drafted the contract, which in this case is the Landlord.

113Therefore, I am satisfied that the parties to the Lease intended and did in fact make a binding and enforceable agreement as it pertains to the Option to Renew contained at paragraph 13 and that such Option is valid and is not void for uncertainty.

114The Tenant provided written reasonable notice of its intent to exercise the FIRST (5) five-year renewal and so advised the Landlord in writing.

115The Tenant is entitled to a renewal of the Lease in accordance with the FIRST Option to Renew and is entitled to peaceful occupation of the Leased Premises in accordance with the terms of the Lease.

Conclusion

116The Landlord’s request for a declaration that the term of the Lease expired on December 31, 2021, is dismissed.

117The Landlord’s request for a declaration that the Tenant has no valid, binding, or enforceable Option to Renew the Lease or to extend by any means whatsoever the term of the Lease or its tenancy of the Leased Premises beyond December 31, 2021, is dismissed.

118The Landlord’s request for an Order that the Tenant peaceably surrender possession of the Leased Premises to the Landlord is dismissed.

119The Landlord shall comply with the terms of the Lease and shall provide the Tenant with peaceable occupation of the Leased Premises as per the First Five (5) Year Term Option to Renew and in accordance with the terms of the Lease.

120In the event the parties are unable to resolve the issue of Additional Rent, they may seek an Order that the issue be determined by trial before any Justice of the Superior Court. I am not seized of this matter.

Costs

121Subject to any offer to settle which may attract costs consequences, as the Tenant is the successful party, the Tenant is entitled to its costs of this Application relating to all matters other than “Additional Rent”.

[122] If the parties are unable to agree upon the amount of costs payable, they may file costs submissions as follows: a. The Tenant shall serve and file their costs submissions within 30 days of the date herein, limited to five pages with a Bill of Costs, Cost Outline, and any relevant Offers to Settle attached thereto; b. The Landlord shall serve and file their responding costs submissions within 45 days of the date herein, limited to five pages with a Bill of Costs, Cost Outline, and any relevant Offers to Settle attached thereto; and c. The Tenant may serve and file a Reply limited to one (1) page, within 60 days of the date herein.

Justice S. J. Woodley Released: October 30, 2023

Footnotes

[1] Klub Kave Inc. v. 2330147 Ontario Inc., 2017 ONSC 7631 at para 41.

[2] The Lease was provided to the Landlord prior to purchase and assumed upon purchase. As such, authorship for the purposes of contra proferentem lies with the Landlord as if it were the party who drafted the Lease.