The tenant held a commercial lease containing an option to purchase the shopping centre.
The tenant subsequently subleased the premises for the entirety of the term.
The landlord sought a declaration that the option to purchase was no longer exercisable by the tenant, arguing the sublease constituted an assignment in law that carried the option with it.
The application judge granted the declaration.
On appeal, the Court of Appeal reversed, holding that while a sublease for the entire term may be an assignment in law, an option to purchase is severable and does not automatically pass with the assignment if the parties intended otherwise.
The court found the parties clearly intended to preserve the option with the tenant.
