



COURT OF APPEAL FOR ONTARIO

CITATION: Orillia (City) v. Metro Ontario Real Estate
    Limited, 2021 ONCA 291

DATE: 20210506

DOCKET: C67924

Feldman, Simmons and Harvison Young JJ.A.

BETWEEN

The Corporation of the
    City of Orillia

Applicant (Appellant/

Respondent by way of cross-appeal)

and

Metro Ontario Real Estate Limited

Respondent
    (Respondent/

Appellant by way of cross-appeal)

AND BETWEEN

Metro
    Ontario Real Estate Limited

Applicant (Respondent/

Appellant by way of cross-appeal)

and

The
    Corporation of the City of Orillia

Respondent (Appellant/

Respondent by way of
    cross-appeal)

Robert Wood, for the appellant/respondent by way of
    cross-appeal

Krista Chaytor and Caitlin Steven, for the
    respondent/appellant by way of cross-appeal

Heard: November 3, 2020 by video conference

On appeal from the judgment of Justice Clayton Conlan of
    the Superior Court of Justice, dated December 20, 2019, with reasons reported
    at 2019 ONSC 7467, 15 R.P.R. (6th) 78.

Harvison Young J.A.:

A.

Overview

[1]

This appeal and cross-appeal arise out of a commercial lease of a
    grocery store in a shopping centre. The appellant landlord, the City of
    Orillia, appeals the judgment of the application judge who found in favour of
    the respondent Metros position that an amendment of the period of the lease
    was ambiguous and considered extrinsic evidence that supported Metros submission
    as to the ultimate term of the lease. Metro cross-appeals from the judgment
    dismissing its claims against Orillia in relation to certain other issues.

B.

Background

[2]

The issue on the main appeal is the expiry date of the lease. The
    original lease commenced on March 1, 1979 with an initial term of 25 years. The
    expiry date was February 28, 2004. Metro also had a right to five successive
    renewal periods of five years each. Thus, the ultimate expiry date was to be
    February 2029, or a maximum of 50 years from the date the lease commenced.

[3]

In 1999, when Metro was planning the construction of an approximately
    10,000 square foot addition, the parties negotiated an amendment to the lease
    which, among other things, extended the term of the lease by ten years,
    commencing on March 1, 2004 and expiring on February 28, 2014. The amendment
    gave Metro the option to extend the term of the lease for three additional
    periods of five years each for a total of five options or 25 years. Orillia brought
    an application for a declaration that the maximum term of the lease is 50
    years, expiring in 2029. At the application hearing and in the main appeal, Orillia
    argued that the lease expires, at the latest, in February 2029, while Metro
    argued that the lease extends until February 2039, at the latest.

[4]

The central issue on the cross-appeal is which party has the obligation
    to replace the roof of the grocery store. Starting in 2016, the roof of the
    grocery store began leaking, and Metro had to replace many of the ceiling tiles
    in the store. Months later, Metro determined that the roof needed to be
    replaced. Orillia took steps to implement a roof overlay solution but later asserted
    that it had no obligation to repair the roof. Metro brought an application
    requesting, among other things, an order requiring Orillia to replace the roof.
    At the application hearing and in the cross-appeal, Metro alleged that under
    the lease, Orillia had an obligation to replace the roof, while Metro only had an
    obligation to repair the roof. Orillia disagreed and argued that the roof,
    whether it requires repair or replacement, is Metros responsibility.

[5]

For the reasons that follow, I would allow the main appeal and dismiss
    the cross-appeal, both in favour of Orillia.

(1)

The decision below

[6]

The applications of Orillia and Metro were heard together. On the lease expiry
    date issue, the application judge dismissed Orillias application and declared,
    in favour of Metro, that the lease would expire in 2039 at the latest. He found
    that the lease was ambiguous because there were two reasonable interpretations
    of the lease term clauses.

[7]

The first interpretation, advanced by Orillia, was that the maximum
    50-year term of the lease was not altered by the amendment. Section 2 of the
    amendment, which extended the term of the original lease by ten years from 2004
    to 2014, reflected the exercising of two of the five five-year renewal options
    under s. 3(2) of the original lease. Section 3 of the amendment, which stated
    that Metro had the option to further extend the term for three additional
    periods of five years each for a total of five options or 25 years, reflected
    the fact that three renewal options remained, so that the lease would expire in
    2029 at the latest.

[8]

The second interpretation, advanced by Metro, was that the parties
    wanted to extend the length of the lease. Section 2 of the amending agreement
    added an additional ten years to the maximum potential length of the lease, and
    s. 3 of the amending agreement reflected that five five-year renewal periods
    remained after 2014, so that the lease would expire in 2039 at the latest.
    Section 3(3) of the original lease providing for a 50-year maximum term was
    altered by s. 6 of the amending agreement, which provided that the original
    lease is amended where necessary to give effect to the amendments.

[9]

The application judge found that the factual matrix did not help resolve
    the ambiguity in the lease. As a result, the application judge examined the
    extrinsic evidence. He found that the extrinsic evidence, including the notice
    of lease registered on title and an estoppel certificate (both of which stated
    that the lease could be extended to 2039), supported Metros position that the
    amendment extended the maximum length of the lease by ten years.

[10]

On
    the roof issue, in brief reasons, the application judge dismissed Metros
    application and determined that Orillia did not have any duty to replace the
    roof. He concluded that Metros obligation to maintain and repair the Leased
    Premises under s. 14(1)(a) of the lease included the roof. The application
    judge did not think that there was any legitimate basis to distinguish that
    clause because it says repair rather than replace.

(2)

Issues on appeal

[11]

Orillia
    makes four arguments on appeal:

·

The application judge erred in determining the lease was ambiguous;

·

The application judge erred in his consideration of the factual
    matrix;

·

The application judge erred in his treatment of the extrinsic
    evidence; and

·

The application judge erred in his consideration of commercial
    reasonableness.

[12]

Metro
    makes two arguments on their cross-appeal, although the parties reached an
    agreement on the second issue during oral argument:

·

The application judge erred in finding that Orillia does not have
    a duty to replace the roof; and

·

The application judge erred in finding that Metro does not have a
    property interest in the Triangle Land.

(3)

The parties positions

[13]

On
    the main appeal, Orillia argues that the application judge committed an
    extricable error of law when he found an ambiguity, as he failed to interpret
    the contract as a whole. He failed to read ss. 2 and 3 of the amending
    agreement harmoniously with the original lease and the rest of the amending
    agreement. The application judges reading of the amendment reads the words
    for three (3) additional periods of five (5) years each and if all remaining
    options are exercised out of s. 3 of the amending agreement.

[14]

Metro
    argues that this is a question of mixed fact and law and that the standard of
    review is one of palpable and overriding error. It submits that the application
    judge did not make such an error. If the parties had intended for s. 2 of the
    amending agreement to be an early exercise by Metro of two of its options to
    renew, then the section could have stated that. The application judge
    considered the lease and amending agreement as a whole, and he specifically
    considered the effect of s. 3(3) of the original lease and s. 6 of the amending
    agreement.

[15]

On
    the roof repairs issue, the cross-appellant, Metro, argues that the application
    judge erred in stating that nothing turned on the fact that Metros only
    obligation under the lease was to repair, rather than replace. It argues that
    the roof work is a replacement rather than a repair.

[16]

The
    respondent on the cross-appeal, Orillia, argues that Metro bears the sole
    responsibility of repairing the Store (as defined in the lease) and that
    Orillia has the responsibility of repairing the remainder of the Shopping
    Centre. The roof is part of the Store and Metro must repair or replace it when
    it affects their use and enjoyment of the premises.

C.

Discussion

[17]

A
    contract must be interpreted as a whole:
Sattva Capital Corp. v. Creston
    Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 64. Courts should
    not strain to create an ambiguity where none exists: see
Chilton v.
    Co-operators General Insurance Co.
(1997), 143 D.L.R. (4th) 647 (Ont.
    C.A.), at p. 654;
Amberber v. IBM Canada Ltd.
, 2018 ONCA 571, 424
    D.L.R. (4th) 169, at para. 63; and G.H.L. Fridman,
The Law of Contract in
    Canada
, 6th ed. (Toronto: Carswell, 2011), at pp. 442-43.

(1)

Standard of review

[18]

Contractual
    interpretation is a question of mixed fact and law requiring the application of
    principles of contractual interpretation to the words of a contract and its
    factual matrix:
Sattva Capital
, at para. 50. However, an extricable
    question of law is subject to a correctness standard of review. Potential
    extricable questions include the application of an incorrect principle, the
    failure to consider a required element of a legal test, or the failure to
    consider a relevant factor:
Sattva Capital
, at para. 53. Courts
    should be cautious in identifying extricable questions of law.

(2)

The main appeal

[19]

In
    my view, the main appeal should be allowed. The application judge committed an
    error of law by failing to consider the wording of the provisions in the
    context of the agreement as a whole. If he had not committed this error, he
    would have come to the conclusion that there was no ambiguity.

[20]

The
    original lease commenced in 1979 with an initial term of 25 years. Metro also
    had the option to renew for five successive periods of five years each. The maximum
    term was to be 50 years with an ultimate expiry date in 2029. The relevant
    provisions of the original lease are as follows:

INITIAL TERM

3. (1) TO HAVE AND TO HOLD the Leased Premises for and during a
    period of 25 years and nil months commencing on the first day of March, 1979.

RENEWALS

3. (2) The Tenant shall have the options to renew this lease
    for 5 successive renewal periods of 5 years each.

MAXIMUM TERM

3. (3) If the exercise of an
    option to renew shall result in the Term exceeding a period of 50 years, then
    notwithstanding the provisions of section 3(2), the Term shall expire on that
    date which is 50 years after the date which is the earlier of the Occupation
    Date or the commencement date of the Term.

[21]

The
    parties entered into a lease amending agreement in 1999. The amendment extended
    the term of the lease by ten years and gave Metro the option to extend the term
    of the lease for three additional periods of five years each for a total of
    five options or 25 years. The relevant provisions of the amending agreement are
    as follows:

2. TERM

The term of the Lease is
extended from
    the date that it would otherwise expire for a further term of ten (10) years
    commencing March 1, 2004 and expiring on February 28, 2014
.

3. RENEWAL

The Tenant has the option to further extend the term of the
    Lease for
three (3) additional periods of five (5) years
    each, for a total of five (5) options or twenty-five (25) years, if all
    remaining options are exercised
. The Tenant may exercise its options in
    the same manner as provided in the Lease.



6. EXISTING LEASE

The Lease is amended wherever
    necessary to give effect to the foregoing and the Landlord and Tenant confirm
    that the Lease as so amended remains in full force and effect. [Emphasis
    added.]

[22]

When
    the 1999 amendment is read within the context of the original lease, there is
    no ambiguity. Three reasons support this conclusion.

[23]

First,
    a reading of the 1999 lease amendment alongside the original lease, considered
    from the perspective of the parties in 1999, leads to this conclusion. It is
    the only coherent way to make sense of the
three
additional
    periods specified in s. 3 of the amendment, and Metro was unable to explain what
    else the three additional periods could refer to, apart from the interpretation
    advanced by Orillia. While the drafting was not perfect, this reading is the
    only harmonious way to read the amendment with the original lease. At the time
    of the amendment, five years remained in the first 25-year term. None of the
    lease extension options under the original lease had been exercised, as the
    first opportunity would only have arisen in 2004. In extending the original
    term by ten years to 2014, the parties provided that there would have been a further
    three options to renew. The provision of for a total of five in s. 3 of the
    amending agreement can only mean that the extension from 2004-2014 comprised an
    early exercise of two of Metros options to extend.

[24]

Second,
    the application judges interpretation would have rendered the overall term of
    the lease to be 60 years rather than 50, which was specifically precluded by
    s. 3(3) of the original lease. The application judges view that the
    basket clause in s. 6 of the amending agreement applies does not survive
    scrutiny. Section 6 provided that the original lease would be amended where
    necessary to give effect to the amendments. But the parties did not amend the
    50-year limit provision, despite the fact that it was in the same section of
    the original lease addressing the initial term and renewal options. It was not
    buried elsewhere in the lease. Had the parties intended to vary the maximum
    term set out in s. 3(3), it would have been easy for them to do so. They did
    not.

[25]

Third,
    this interpretation is supported by the factual matrix at the time of the 1999
    amendment. Metro was expanding its store significantly, by 10,676 square feet.
    The parties agree that as part of Metros financing, the landlord contributed
    about $672,000 to the project ($63 per square foot). In return, Metro agreed to
    pay about $4.50 more per square foot in rent in the extension area, compared to
    the rent it was paying for the original area of the store. There is no dispute
    that it was therefore in the landlords interest to secure an early extension
    of the lease by ten years to 2014. While Metro undoubtedly expended large
    amounts on the renovations, one can infer that this was a business decision and
    it already had the right to remain for a further 30 years at the same rent if
    it chose to exercise the options.

[26]

In
    short, the application judge fell into error in failing to consider the actual
    wording within the context of the lease as a whole, which led him to find that
    the provision was ambiguous. This was an extricable legal error: see
Thunder
    Bay (City) v. Canadian National Railway Company
, 2018 ONCA 517, 424 D.L.R.
    (4th) 588, at para. 46, leave to appeal refused, [2018] S.C.C.A. No. 358. The
    expiry date of the lease is 2029 and not 2039 as Metro argued. Orillias appeal
    must be allowed.

(3)

The cross-appeal

(a)

The roof repairs

[27]

Starting
    in 2016, Metro experienced leaks in the roof at the grocery store, and its roof
    consultant determined that the roof needed to be replaced. The consultant
    suggested either a roof overlay that would salvage the existing insulation, or
    a full roof replacement strategy. Orillia approved, budgeted for, and entered
    into a contract for the roof overlay solution, but Orillia later took the
    position that these steps were taken in a mistaken belief that it had an obligation
    to repair the roof and that it now understands it has no such obligation. It
    was in this context that Metro sought an order requiring Orillia to replace the
    roof.

[28]

The
    application judge correctly concluded that Orillia did not have any duty to
    replace the roof and that Metro had the obligation to maintain and repair the
    roof. Section 14(1)(a) of the lease states that the tenant, Metro, must
    maintain and repair the Leased Premises. The landlords obligation to make
    repairs and replacements in s. 15 is subject to the tenants obligations under
    s. 14.

[29]

The
    relevant sections of the lease are as follows:

ARTICLE XIV  REPAIR, ALTERATIONS AND MAINTENANCE OF STORE

TENANTS OBLIGATION

14. (1)
The Tenant covenants
that from and after the earlier of the Occupation Date or
    the date on which the Tenant accepts possession of the Store
and opens the
    Store for business to the public

(a) The Tenant shall maintain and repair the Leased Premises.

EXCEPTIONS

14. (2) The obligations of the Tenant under section 14(1) shall
    be subject to the following exceptions:

(a) reasonable wear and tear which does not affect the use
    and enjoyment of the Leased Premises by the Tenant.



ARTICLE XV  REPAIR, ALTERATIONS AND MAINTENANCE OF SHOPPING
    CENTRE

LANDLORDS OBLIGATIONS

15. (1) Subject to Article XIV, the Landlord shall

(a) keep or cause all buildings and improvements in the
    Shopping Centre and the Common Facilities to be kept in good repair and in a
    clean, orderly and safe condition (both inside and outside), and

(b) in a good and workmanlike
    manner promptly do all such work and make or cause to be made all necessary
    repairs, make all necessary rebuildings and replacements (structural or
    otherwise), ordinary as well as extraordinary, and foreseen as well as unforeseen,
    including all such repairs, rebuildings and replacements which as a prudent
    owner thereof it should do or make to properly maintain and operate all
    buildings and improvements in the Shopping Centre and the Common Facilities.

[30]

Given
    the structure of the repair obligations under this lease, the proper analytical
    approach is to determine 1) whether the roof work is included in the tenants
    obligation to repair, 2) determine whether the roof work falls under an
    exception listed in s. 14(2), and 3) if the roof work is not the tenants
    obligation, determine if the work falls under the landlords repair obligation
    in s. 15 of the lease.

(i)

Tenants obligation to repair

[31]

The
    construction of a covenant of repair in a lease is a contextual, fact-specific
    exercise: see
G.M. Pace Enterprises Inc. v. Tsai
, 2003 BCSC 1336, 37
    B.L.R. (3d) 60, at para. 66;
Lurcott v. Wakely
, [1911] 1 K.B. 905 (C.A.
    (Eng.)), at pp. 915-16. Like all contracts, the contract as a whole forms part
    of this context. Several principles on interpreting lease repair covenants
    emerge from a review of English and Canadian case law. First, the primary
    inquiry is to ask whether the repair gives the landlord back something entirely
    different than was demised. Second, the obligation to repair must be
    interpreted having regard to the specific wording of the repair covenant, the
    terms of the lease as a whole, and the premises rented, including its condition
    at the start of the lease. Third, a repair will generally involve some kind of
    replacement or renewal. One question is whether the replacement or renewal is
    of subsidiary parts of the whole or of the entire thing.

[32]

A
    tenant that covenants to repair the premises is not obligated to fix defects in
    the premises that go beyond a repair. The analytical question is whether the
    work that the tenant is being asked to do can properly be described as repair,
    or whether on the contrary it would involve giving back to the landlord a
    wholly different thing from that which he demised:
Ravenseft Properties
    Ltd. v. Davstone (Holdings) Ltd.
, [1980] Q.B. 12 (Q.B.D. (Eng.)), at p. 21;
    Nicholas Dowding
et al.
, eds.,
Woodfall: Landlord and Tenant
,
    loose-leaf (London: Sweet & Maxwell, 2020) (loose-leaf updated 2021,
    release 122), vol. 1 at 13.032.

[33]

In
Morcom v. Campbell-Johnson
, [1955] 3 W.L.R. 497 (C.A. (Eng.)), at p.
    501, leave to appeal to H.L. (Eng.) refused, Denning L.J. observed that the
    distinction between a repair and an improvement is whether it is a replacement
    of something already there or if it is the provision of something new:

It seems to me that the test, so
    far as one can give any test in these matters, is this: if the work which is
    done is the provision of something new for the benefit of the occupier, that
    is, properly speaking, an improvement; but if it is only the replacement of
    something already there, which has become dilapidated or worn out, then, albeit
    that it is a replacement by its modern equivalent, it comes within the category
    of repairs and not improvements.

[34]

The
    test to determine whether the work goes beyond a repair has been stated in
    many different ways. One approach is to look at the particular building, to
    look at the state which it is in
at the date of the lease
,
    to look at the precise terms of the lease, and then come to a conclusion as to
    whether, on a fair interpretation of those terms in relation to that state, the
    requisite work can fairly be termed repair. However large the covenant it must
    not be looked at
in vacuo

    (emphasis in original):
Brew Brothers Ltd. v. Snax (Ross) Ltd.
, [1970]
    1 Q.B. 612 (C.A. (Eng.)), at p. 640, leave to appeal to H.L. (Eng.) refused
    (October 13, 1969);
Dowding
, at
    13.032.

[35]

In
Lurcott
, at p. 924, Buckley L.J. described repair as restoration by
    renewal or replacement of subsidiary parts of a whole. Renewal, as
    distinguished from repair, is reconstruction of the entirety, meaning by the
    entirety not necessarily the whole but substantially the whole subject-matter
    under discussion. Buckley L.J. continued, at p. 924, the question of repair
    is in every case one of degree, and the test is whether the act to be done is
    one which in substance is the renewal or replacement of defective parts, or the
    renewal or replacement of substantially the whole.

[36]

The
    English law on the definition of repair has, with some exceptions not relevant
    here, been adopted by Canadian courts: see e.g.
Norbury Sudbury Ltd. v.
    Noront Steel (1981) Ltd.
(1984), 11 D.L.R. (4th) 686 (Ont. H.C.), at p. 698;
Hall v. Campbellford Cloth Co. Ltd.
, [1944] 2 D.L.R. 247 (Ont. H.C.).

[37]

There
    are only a few Canadian cases that deal specifically with the obligation to
    repair a roof under a lease. In
Hall
, the roof of a curling rink
    collapsed after an unusual amount of snow accumulated on top of it. The roof
    and premises were available to be repaired, and the premises were not wholly destroyed.
    After a thorough review of Canadian, English, and American case law, the court
    determined, in conclusory reasons, that the repair fell under the tenants
    obligation to repair, reasonable wear and tear and damage by fire, lightning
    and tempest only excepted.

[38]

In
G.M. Pace,
the court concluded that the tenant was not obligated to
    replace the roof of a service station that was at the end of its useful life. The
    service station was described as an older building that had suffered the
    ravages of neglect, and the roof was the original roof, when the lease began.
    As a result, the court determined that replacing the roof would provide to the
    landlord a building in a condition better than the tenant had received it. The
    tenant was only obliged to maintain, through repairs, the building as it
    existed when the lease began. In addition, the roof did not require immediate replacement
    and could continue to be bandaided for quite some time.

[39]

Finally,
    in
708-1111 West Hastings Ltd. v. Coopers & Lybrand Vancouver Ltd.
,
    1990 CanLII 1084 (B.C. Co. Ct.), revd on other grounds, 1991 CanLII 1374 (B.C.C.A.),
    the issue was whether the roof membrane repair was a structural repair. In
    deciding the issue, the court commented in
obiter
that [s]ome of the
    English cases appear very harsh on the tenant. But it must be kept in mind the
    tenancies are frequently of long duration. That a tenant for 40 years would be
    held responsible for replacing a 20 year bonded roof during the term is not
    remarkable. Some have cautioned that the length of the lease, although
    relevant, cannot be weighed too heavily: see
Post Office v. Aquarius
    Properties Ltd.
, [1987] 1 All E.R. 1055 (C.A.), at pp. 1064-65.

[40]

In
    summary, when interpreting a covenant of repair in a lease, a court should
    consider:

(i)        whether the
    repair gives the landlord back something entirely different than was demised (see
Ravenseft
;
Morcom
);

(ii)        the circumstances
    surrounding the obligation to repair including the specific wording of the
    covenant, the terms of the lease, the premises rented, and the condition of the
    premises at the start of the lease (see
Brew Brothers
;
G.M. Pace
;
708-1111 West Hastings
; and
Post Office
); and

(iii)       whether the
    replacement or renewal is of subsidiary parts of the whole or of the entire
    thing (see
Lurcott
).

[41]

The
    parties, quite properly, did not submit that s. 25 of the lease, which addresses
    end of term obligations, applied to this case. The lease was renewed in 2019
    and the final end of the lease will be 2029 as determined above.

Application to the facts

[42]

This
    case involves the commercial lease of an anchor tenant. The lease length is a
    maximum of 50 years, which is longer than the typical service life of built-up
    roofs of 20-25 years, according to Metros roof consultants report. The
    building was new when the lease started. When it became clear that the roof
    needed significant repairs, the parties were presented with two options: (i) a
    roof overlay, which would preserve part of the roof and defer a roof
    replacement for another 15-20 years, and (ii) a full roof replacement. Orillia
    elected for the less expensive roof overlay option.

[43]

The
    starting point for the determination of the parties rights and obligations
    under a commercial lease must be the lease itself, read as a whole. The
    covenant to repair as set out in s. 14(1) imposes a general obligation upon the
    tenant, while s. 14(2) creates several narrow exceptions. Metro did not argue
    that the roof repairs fall within one of the exceptions in s. 14(2) but argued
    that it was a replacement and not a repair and thus did not fall within the
    scope of s. 14(1).

[44]

Given
    the case law referred to above, I reject Metros submissions that the roof
    repair was a replacement rather than a repair. Here, the roof overlay
    solution will not itself even bring the property back to its original condition
    as it will last less time than a new roof would. This case is distinguishable from
    the concern in
G.M. Pace
, where a roof replacement by the tenant would
    have returned the premises to the landlord in a better condition than it was in
    when the lease began. It cannot be said that the roof overlay will give Orillia
    something entirely different  or better  than what was originally demised or
    that it replaces substantially the entire premises. At the beginning of the
    lease in 1979, the roof was brand new. Further, given the evidence that the
    roof overlay would last 15-20 years, and the fact that the lease was renewed in
    2019, and has one more renewal in 2024 before the end of the lease in 2029, it
    seems likely that Metro will receive the bulk of the benefit of the roof
    overlay.

[45]

It
    should also be noted that the covenant to repair issues in this appeal arise in
    the course of the lease, and thus are not governed by s. 25(2) of the lease,
    which provides that the tenant must surrender the leased premises upon
    termination of the term in good and substantial repair and condition in
    accordance with its covenants to maintain and repair the Leased Premises. This
    covenant may raise distinct considerations that are not necessary to canvas on
    this appeal.

(ii)

Reasonable wear and tear exception

[46]

A
    reasonable wear and tear exception excludes damage due to the reasonable use
    of the house by the tenant and the ordinary operation of natural forces from a
    tenants obligation to repair: see
Haskell v. Marlow
, [1928] 2 K.B. 45
    (K.B.D. (Eng.)), at p. 59;
Stellarbridge Management Inc. v. Magna
    International (Canada) Inc.
, 2004 CanLII 9852 (Ont. C.A.), at para. 41, leave
    to appeal refused, [2004] S.C.C.A. No. 371. The burden is on the party claiming
    reasonable wear and tear to show that they are entitled to rely on the
    exception: see
Stellarbridge
, at paras. 60-64.

[47]

In
    this case, s. 14(2)(a) excludes from the tenants repair obligation only
    reasonable wear and tear which does not affect the use and enjoyment of the
    Leased Premises by the Tenant. This exclusion could not apply as the record
    indicates that the roof was, at points, leaking, which would affect the tenants
    use and enjoyment of the property.

(iii)

Landlords obligation of repair

[48]

Given
    my conclusion that the roof repair is Metros obligation, it is clear from the
    terms of s. 15 of the lease that Orillia is not obligated to repair the roof.

[49]

A
    review of the lease indicates that there are no additional provisions that are
    relevant to the interpretation of ss. 14 and 15 in this case. The application
    judge did not err in concluding that Orillia did not have any duty to replace
    the roof.

(b)

The Triangle Land

[50]

In
    the course of argument before this court, the parties were able to agree that
    it was not necessary to determine any issues of rights with respect to the
    Triangle Land on this appeal at this time.

D.

Disposition

[51]

I
    would allow the appeal and dismiss the cross-appeal. All inclusive costs of the
    appeal of $25,000 and all inclusive costs of the application below of $35,000
    are payable by the respondent and appellant by way of cross-appeal, Metro, to the
    appellant and respondent by way of cross-appeal, Orillia, for a total of
    $60,000.

Released: May 6, 2021 K.F.

A. Harvison Young J.A.

I agree K. Feldman J.A.

I agree Janet Simmons J.A.


