) ) 1127776 ONTARIO LIMITED ) ) W. Kaufmann v. G. Galati, 2017 ONSC 6808

CITATION : 1127776 Ontario Limited v. Deciem Inc., 2017 ONSC 6808 DIVISIONAL COURT FILE NO.: 102/17 DATE: 20171114 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT SWINTON, RADY and MATHESON JJ. BETWEEN: ) ) 1127776 ONTARIO LIMITED ) ) W. Kaufmann and G. Galati , for the Plaintiff (Appellant) ) ) Plaintiff (Appellant) ) ) – and – ) ) DECIEM INC. ) ) D. Contractor , for the Defendant (Respondent) ) Defendant (Respondent) ) ) ) HEARD at Toronto: November 14, 2017 SWINTON J. (Orally) [ 1 ] 1127776 Ontario Limited appeals from the order of Perell J. dated February 3, 2017 in which he granted the respondent tenant’s motion for

summary judgment and ordered the appellant to pay $10,163.32, the balance of the respondent’s security deposit less an adjustment for Additional Rent for the lease year ending July 31, 2015. [ 2 ] The only issue raised in the Notice of Appeal is the

interpretation of the Additional Rent provision in the parties’ lease. In oral argument, a second issue was raised concerning an alleged error by the motions judge in his finding that the notice of adjustment of Additional Rent for 2014 was served late. No notice of this new argument was given to the respondent. Consequently, we decline to deal with this new argument. [ 3 ] Article 2(3) of the lease requires the tenant to pay Additional Rent throughout a lease year based on an estimate of the amount due in accordance with the terms of the lease.

It also provides that “the Landlord shall provide the Tenant with a statement of the Additional Rent for the relevant lease year within 180 days of the Landlord’s financial year end”, and the parties shall expeditiously make necessary adjustments to the payment.

In particular, the tenant may not claim a readjustment based solely upon any error of estimation, determination or calculation unless claimed in writing within six months after the lease year to which the claim relates. [ 4 ] The motions judge concluded that the word “shall” required the landlord to give notice of an adjustment for each lease year within 180 days of the landlord’s financial year end. In the present case, the landlord first gave notice of adjustments for the 2012, 2013, and 2014 lease years in July 2015, although its year end was March 31. [ 5 ] The motions judge concluded that the landlord’s

interpretation that “shall” was directory would give “no meaning or effect to the notice provisions in the lease which prescribed a payment scheme and

schedule that was fair and had advantages for both parties in managing their business and financial affairs”. The motions judge concluded that the landlord was barred from claiming the adjustments for 2012, 2013, and 2014. [ 6 ] Even if the standard of review is correctness, we would not intervene. The motions judge’s

interpretation was consistent with the language of the lease, particularly when one takes into account the six month limitation on tenants seeking readjustment. [ 7 ] The decision of the Superior Court in 2373322 Ontario Inc. v. Nollis , 2017 ONSC 1518 , is distinguishable. That case turned on different wording in a lease and a different factual context. [ 8 ] Accordingly, the appeal is dismissed. [ 9 ] I have endorsed the Appeal Book and Compendium of the Appellant as follows “This appeal is dismissed for oral reasons delivered today. Costs to the respondent fixed at $10,000.00 all in, an amount agreed upon by the parties.”

___________________________ SWINTON J. I agree ___________________________ RADY J. I agree ___________________________ MATHESON J. Date of Reasons for Judgment: November 14, 2017 Date of Release: November 16, 2017 CITATION : 1127776 Ontario Limited v. Deciem Inc., 2017 ONSC 6808 DIVISIONAL COURT FILE NO.: 102/17 DATE: 20171114 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT SWINTON, RADY and MATHESON JJ. BETWEEN: 1127776 ONTARIO LIMITED Plaintiff (Appellant) – and – DECIEM INC. Defendant (Respondent) ORAL REASONS FOR JUDGMENT SWINTON J.

Date of Reasons for Judgment: November 14, 2017 Date of Release: November 16, 2017