



COURT OF APPEAL FOR ONTARIO

CITATION: Beswick Properties Yonge Street
    Inc. v. Royal Bank of Canada, 2013 ONCA 612

DATE: 20131010

DOCKET: C56291

Goudge, Cronk and Gillese JJ.A.

BETWEEN

Beswick Properties Yonge
    Street Inc.

Applicant (Appellant)

and

Royal Bank of Canada

Respondent (Respondent)

Paul J. Pape and Andrea M. Boliero, for the appellant

Sharon Wong, for the respondent

Heard: October 2, 2013

On appeal from the judgment of Justice Michael K.
    McKelvey of the Superior Court of Justice, dated October 15, 2012.

ENDORSEMENT

[1]

The appellant/landlord appeals from the decision below that the
    respondent/tenant is not liable to it for the excess hard costs it incurred in constructing
    the building at 14785 Yonge Street in Aurora.

[2]

The appellants argument in this court is that the application judge
    erred in reading the binding Offer to Lease between the parties to require the
    respondents approval of the excess hard costs in order for the respondent to
    be liable for those costs.

[3]

It is acknowledged that no such approval was obtained by the appellant
    and no construction contracts have ever been submitted for approval to the
    respondent.

[4]

Central to the appeal is one paragraph in Article 7 of the Offer to
    Lease:

Upon substantial completion of the Landlords Work, the
    Landlord shall provide the Tenant with copies of all construction invoices to
    evidence the total hard costs for constructing the Premises.  In the event that
    the Landlords actual hard costs for constructing the Premises are more than
    $130.00 per square foot of Rentable Area of the Building, exclusive of Value
    Added Tax, the Tenant shall,
provided such excess costs are in accordance
    with the contract or contracts approved by the Tenant or have otherwise been
    approved in advance by the Tenant
, pay the difference to the Landlord
    within thirty (30) days after substantial completion of the Landlords Work.
    [Emphasis added.]

[5]

The appellants argument turns on the meaning, if any, to be given to
    the phrase in this paragraph: provided such excess costs are in accordance
    with the contract or contracts approved by the Tenant or have otherwise been
    approved in advance by the Tenant.

[6]

The appellant says that this phrase is a vestige of the original draft
    of the Offer to Lease, which required the appellant to put the construction
    contract out for bids, thereby giving commercial sense to the disputed phrase. 
    When the Offer to Lease was finalized and became binding, the bid provision was
    removed, since the appellant was to do the construction in-house.  The disputed
    phrase however remained.  The appellant argues that the phrase is meaningless
    absent the bid provision.  It says commercial reality requires that conclusion,
    since the business essence of the contract always was that the respondent would
    be responsible for excess hard costs, provided they were reasonable.

[7]

We do not agree.  The disputed phrase remains a term of the contract. 
    Its plain meaning requires respondent approval of the excess hard costs through
    approval of the construction contracts or otherwise in advance.  In our view,
    commercial reality does not require these words to be given no meaning as the
    appellant contends.  It would have been quite possible for the appellant to
    have obtained approval for the excess hard costs through approval of the
    construction contracts or advance approval otherwise.  This gives some control
    over excess hard costs to the respondent, rather than leaving that entirely to
    the appellant.

[8]

Moreover, to give this phrase no meaning is to effectively conclude that
    it was included in the Offer to Lease by mutual mistake.  However, there is
    simply no evidence to support this theory.  It is simply not open to us to read
    this phrase out of the Offer to Lease.

[9]

Nor do we view the disputed phrase to be ambiguous.  Indeed the
    appellant does not advance a meaning other than the plain meaning.  It simply
    says the phrase is meaningless, an argument we have dealt with.

[10]

The
    appellant does not advance the remaining arguments in its factum and we need
    not deal with them.

[11]

In
    the final analysis, while it may be that the result seems to be a hard
    commercial reality, we are compelled to it by the wording of the contract.

[12]

The
    appeal must be dismissed.

[13]

In
    light of the result of the appeal, the respondent withdrew its substantive
    cross-appeal.

[14]

The
    respondent, however, pursued its cross-appeal as to costs.  We see no error in
    principle in the disposition of costs by the application judge.  Nor is his
    award plainly wrong.  It was quite open, and indeed we think correct, to treat
    the appellant, who was the applicant, as the effective plaintiff for the
    purposes of Rule 49.  Moreover we agree with the application judge that the
    divided success on the applications deserved some consideration in the award of
    costs below.  In our view, there is no basis for this court to interfere with
    his discretion in that award.  We would therefore dismiss the cross-appeal as
    to costs.

[15]

In
    the result, success in this court has been mixed.  While the respondent was in
    the main successful, it was unsuccessful in its costs cross-appeal.  Taking
    that into account, and determining what is fair and reasonable in the
    circumstances, we would award the respondent $25,000 in total as the costs
    order resulting from the appeal and cross-appeal.

S.T.
    Goudge J.A.

E.A.
    Cronk J.A.

E.E.
    Gillese J.A.


