The applicant landlord sought a determination that the tenant was required to contribute to construction cost overruns under two offers to lease for commercial space in a shopping centre.
The agreements provided that the tenant would pay excess hard construction costs above a specified amount per square foot if such costs were approved in advance by the tenant or incurred under approved contracts.
The court held that the tenant’s prior approval of construction contracts or excess costs was a clear condition precedent to any obligation to pay cost overruns.
Because the landlord failed to obtain such approval before construction was completed, the tenant was not liable for any excess costs.
The court also held, obiter, that if liability had arisen, the cost of constructing the underground garage would have been included as part of the hard construction costs.
