



COURT OF APPEAL FOR ONTARIO

CITATION: Canadian Language Leadership Centre - CLLC Inc. v.
    20 Eglinton Commercial Centre Inc., 2018 ONCA 604

DATE: 20180629

DOCKET: C64013

Pepall, van Rensburg and Paciocco JJ.A.

BETWEEN

Canadian Language Leadership Centre  CLLC Inc.

Plaintiff (Appellant)

and

20 Eglinton Commercial Centre
    Inc.

Defendant (Respondent)

Jerome R. Morse and David M. Trafford, for the appellant

Alanna P. Brogan, for the respondent

Heard: May 24, 2018

On appeal from the judgment of Justice Edward M. Morgan
    of the Superior Court of Justice, dated June 7, 2017, with reasons for judgment
    reported at 2017 ONSC 3542.

REASONS FOR DECISION

[1]

The appellant, Canadian Language Leadership Centre  CLLC Inc. (CLLC),
    sued its commercial landlord, the respondent, 20 Eglinton Commercial Centre
    Inc. (20 Eglinton), for damages arising from water leaks that originated in
    the buildings roof, and from a non-functioning gas line. There were two
    agreements between the parties that are material to CLLCs lawsuit: (i) an
    Agreement to Lease that was effective between the parties on August 22, 2012;
    and (ii) a 5 year Office Lease executed on October 16, 2012, for a term
    commencing September 1, 2012 (Lease).

[2]

20 Eglinton sought and obtained summary judgment dismissing CLLCs
    action on the basis that it disclosed no genuine issue requiring a trial.

[3]

CLLC seeks, on appeal, to have this summary judgment set aside.

[4]

We are of the view that this appeal must be allowed and the summary
    judgment set aside. CLLCs claim for damages arising from the leaking roof
    required the motion judge to determine whether CLLC assumed the risk of damage,
    if sustained. Clause 9.02 of the lease provided:

9.02 Tenants Insurance

(a) The Tenant shall, throughout the period that the Tenant is
    given possession of the Premises and during the entire Term, at its sole cost
    and expense, take out and keep in full force and effect and in the names of the
    Tenant, the Landlord, and the Landlords mortgagee (if required), as their
    respective interests may appear, the following insurance

[5]

The reasons disclose no real examination by the motion judge of the
    commencement of CLLCs obligation to insure.

[6]

There were material factual contests between the parties that presented
    genuine issues requiring a trial that were not resolved by the motion judge. The
    disputed factual issues relevant to the application of clause 9.02 included when
    CLLC took possession of the premises, and when water leaks caused damage to
    CLLC. The parties disagreed about whether the premises were insurable in light
    of the water leaks. This is an important fact given 20 Eglintons concession
    that if the premises were not insurable when CLLCs obligation to insure arose,
    then CLLC could not be bound by clause 9.02.

[7]

The motion judge did not address these crucial factual issues. He opened
    his reasons, at para. 4, by noting that this is not a case where intensely
    fact-specific matters are in issue. Rather, he said it was a quintessentially
    document-based case, suggesting that he saw no need to resolve the factual
    disputes identified above.

[8]

Only two passages in the motion judges reasons could reflect relevant factual
    findings.

[9]

The first, at para. 13 of the reasons, is ambiguous:

Counsel for the Defendant responds that the entirety of efforts
    apparently made by the Plaintiff is one casual phone call, not followed up by
    anything in writing or an inquiry to any other company. Furthermore, to state
    the obvious, had the Plaintiff obtained insurance at the outset of its tenancy
    as it was supposed to do, this problem would not have arisen. The Plaintiff
    signed a covenant to insure; no one who really intends to purchase insurance
    coverage waits until the damage already occurs. It was the Plaintiffs
    obligation to obtain insurance when it was available, and not to roll the dice
    with a wait-and-see position in respect of the need for coverage.

[10]

It
    is not clear whether, in para. 13, the motion judge was summarizing arguments
    made by 20 Eglinton or making his own determinations. Given the organization of
    his reasons, it would appear that these were the submissions advanced by 20
    Eglinton rather than the motion judges factual findings.

[11]

The
    second, at para. 16 of the reasons, is also unclear:

In any event, counsel for the Defendant points out that the
    Plaintiffs business had indeed already commenced at the time of the roof
    leaks. It had an administration in place, it had hired personnel who had
    started working, it had students registered for its language school, etc. The
    language classes themselves had not yet started, but the Plaintiffs business
    itself was up and running.

[12]

This
    paragraph, made in the context of considering CLLCs argument that what
    occurred was business delay and not business interruption, is ambiguous. Does
    it contain a finding of fact, or a summary of arguments made? If it is a
    finding of fact, it fails to address when the roof leaks started, and whether CLLCs
    business was up and running
in the leased premises
at the time the
    roof leaks commenced.

[13]

In
    our view, the motion judge erred by failing to consider and resolve these
    factual disputes in finding that there was no genuine issue requiring a trial.
    Indeed, the motion judge never invoked his fact-finding powers under rr.
    20.04(2.1) or (2.2) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg.
    194 to make findings of fact or to resolve factual disputes on summary
    judgment.

[14]

The
    motion judge committed a further extricable legal error in finding that the damage
    claims linked to the defective gas line were clearly without merit because of
    the as is provisions of the Lease.

[15]

In
    arriving at that conclusion, the motion judge appears not to have considered other
    language in the Lease that confines the as is clause to the Premises.
    Premises is defined in the Lease in clause 1.01(o), in contrast to Building,
    which is defined in clause 1.01(d). The motion judge merged these distinct terms
    in his reasons, commenting at para. 20: The entire point of this kind of
    clause is that the landlord is not detailing for the tenant each and every
    defect or non-working system in the premises or the building. This is a
    material error in determining the scope of the application of the as is
    provisions of the Lease.

[16]

Moreover,
    the as is clauses are found in both Schedules D and E to the Lease.
    Schedule D merely declares acknowledgment by CLLC that the 5
th
Floor premises is being transferred on an as is basis. Schedule E
    describes items that are included in the as is status, including, but not
    limited to, the status of its HVAC, duct work, makeup air, plumbing and
    electrical systems, incomplete washrooms, any equipment, facilities, and
    leasehold improvements. CLLC argues that the omission of gas line in this
    list of inclusions is significant, while 20 Eglinton argues that the gas line,
    which was important for the HVAC system, was contemplated in Schedule E as part
    of the HVAC, duct work and makeup air systems.

[17]

Yet
    the motion judge referred only to Schedule D in his decision. He appears not
    to have considered the impact of Schedule E, if any, on 20 Eglintons
    responsibility.

[18]

In
    both of these respects  the failure to note the difference between the Premises
    and Building as defined in the contract, and the disregard of Schedule E
    when applying the as is clause  the motion judge committed extricable errors
    of law in interpreting the contract.

[19]

Finally,
    there was evidence that the gas line was not connected. Whether the connection
    problem was at the fifth floor, and therefore within the premises, or elsewhere
    in the building, and therefore arguably outside of the premises, was a genuine
    issue that ought to have been considered. This factor ought to have been considered
    by the motion judge.

[20]

We
    therefore allow the appeal and set aside the motion judges summary judgment,
    including the costs order made below.

[21]

We
    grant costs of this appeal to the appellant on a partial indemnity basis in the
    amount of $20,000, inclusive of disbursements and applicable taxes.

S.E. Pepall J.A.

K. van Rensburg J.A.

David M. Paciocco J.A.


