Focus On

COMMERCIAL TENANCIES - Rent - Tenant's right to withhold or set-off

Monday, May 06, 2019 @ 9:14 AM  


Lexis Advance® Quicklaw®
Appeal by the defendant from the summary judgment granting the plaintiff’s claim for a declaration no rent was payable under the terms of a sublease and dismissing the defendant’s counterclaim for rent. The plaintiff’s development agreement with VAPP provided that under a sublease for the use of a parkade, the plaintiff would owe VAPP the same amount annually as the interest payable by VAPP under the terms of the mortgage. The sublease further provided that if VAPP did not make its payments under the mortgage, no rent was payable by the plaintiff. When VAPP defaulted on its mortgage, the plaintiff transferred the mortgage to the defendant, which was at the time a wholly owned subsidiary of the plaintiff. The plaintiff subsequently sold the shares in the defendant to another corporation. The plaintiff forgave the defendant the entire indebtedness of $2.68 million owing under the mortgage to facilitate the sale of the shares. It had made no payments for rent under the sublease. In 2016, the defendant demanded payment for rent under the sublease. The motion judge found the plaintiff was required to pay rent under the sublease only when VAPP made payments under the mortgage and that VAPP’s obligation to make mortgage payments and the plaintiff’s obligation to pay rent ended when the debt was extinguished.

HELD: Appeal dismissed. The motion judge’s decision was reviewable on a deferential standard and could not be interfered with absent a palpable and overriding error. The motion judge’s interpretation of the sublease reflected the ordinary and grammatical meaning of the words and was consistent with the evidence of the surrounding circumstances at the time the sublease was executed. Her reasons were sufficient. The matter was not factually or legally complex. The motion judge did not err in granting summary judgment.

North Portage Development Corp. v. Cityscape Residence Corp., [2019] M.J. No. 89, Manitoba Court of Appeal, B.M. Hamilton, J. leMaistre and K.I. Simonsen JJ.A., April 4, 2019. Digest No. TLD-May62019003