



COURT OF APPEAL FOR ONTARIO

CITATION: Narwhal International Limited v.
    Teda International Realty Inc., 2021 ONCA 659

DATE: 20210927

DOCKET: C68786

Strathy C.J.O., Pepall and Pardu
    JJ.A.

BETWEEN

Narwhal
    International Limited

Applicant (Appellant)

and

Teda International Realty Inc.

Respondent (Respondent)

Gennady Tcherny, President of Narwal
    International Limited, acting as agent for the appellant, with leave of the
    Court

Stephanie Tassopoulos, for the
    respondent

Heard: September 17, 2021 by video conference

On appeal from the order of Justice Breese
    Davies of the Superior Court of Justice, dated January 7, 2021.

REASONS FOR DECISION

[1]

This appeal concerns a dispute about the renewal
    term in a commercial lease.

[2]

In March 2019, the appellant tenant notified the
    respondent landlord of its intention to renew the lease for a five-year period.
    Protracted negotiations between the parties did not result in agreement on the
    rent to be paid during the renewal period. The appellant commenced an
    application for a declaration that it was entitled to renew the lease and for
    an order setting the rent for the renewal period.

[3]

There were two principal issues before the
    application judge. The first concerned which of two documents was actually the
    agreement to lease executed by the parties. This was significant because the
    renewal provisions in the two documents were different.

[4]

After reviewing the conflicting evidence
    tendered by the parties, the application judge found that the document tendered
    by the respondent was the agreement made between the parties. She gave cogent
    reasons for her conclusion.

[5]

Unlike the document proffered by the appellant,
    which provided that the rent on renewal would be determined by reference to
    prevailing market rates for similar space, the document produced by the
    respondent, and accepted by the application judge, simply stated that the net
    rental rate for the five-year renewal period was to be discussed between
    landlord and tenant.

[6]

The application judge noted that a right to
    renew a lease on the same terms except for the rental rate does not create an
    enforceable legal obligation, other than an obligation on the landlord to
    negotiate in good faith: referring
inter alia
to
Godson v. P. Burns
    & Co.
(1919), 46 D.L.R. 97 (S.C.C.);
Molson Canada 2005 v. Miller
    Brewing Company
, 2013 ONSC 2758, 116 O.R. (3d) 108, at paras. 95-108.

[7]

The second issue was whether the landlord had
    negotiated in good faith with respect to the rental rate for the renewal term.

[8]

After setting out the chronology of the renewal
    discussions in considerable detail, the application judge found that [the
    respondent] acted in good faith during its negotiations with [the appellant]
    and ultimately made a reasonable offer to [the appellant] for the renewal. The
    appellant rejected that offer, although it subsequently attempted to accept the
    offer after it received notice of termination of the lease. Again, the
    application judge gave detailed and thoughtful reasons for her finding of good
    faith.

[9]

The application judge therefore dismissed the
    appellants application.

[10]

In this appeal, the appellant challenges the
    application judges findings on both central issues: the determination of which
    of the two documents constituted the agreement to lease and whether the
    respondent had engaged in good faith negotiations to renew the lease.

[11]

The appellant also seeks to introduce fresh
    evidence on the appeal. In essence, that evidence challenges: (a) the
    respondents evidence on the application concerning the appropriate market rent
    for the premises; (b) the respondents conduct after the hearing of the
    application; and (c) the conduct of the respondent and its counsel in related
    proceedings.

[12]

We decline to admit the fresh evidence. While
    some of it relates to events that occurred after the application had been heard
    and was not available at the hearing, we are not satisfied that any of the
    evidence is relevant to the issues to be determined on this appeal. In any
    event, we are satisfied that even if the evidence were to be admitted, it would
not
have affected the outcome as it does not call
    into question the application judges findings of fact on the central issues: see
R. v. Palmer
, [1980] 1 S.C.R. 759.

[13]

Turning to the appeal itself, the appellant
    invites us to revisit the findings of fact made by the application judge. In
    effect, it argues that the application judge erred in finding that the
    agreement to lease was the document tendered by the respondent and in finding that
    the respondent had negotiated in good faith.

[14]

Unfortunately, the appellant misunderstands the
    function of an appellate court. It is not this Courts responsibility to
    conduct a second trial. In the absence of a palpable and overriding error in
    the application judges assessment of the evidence, an appellate court must
    accept the judges findings of fact. A palpable and overriding error is an
    obvious error that is sufficiently significant to vitiate the challenged
    finding of fact:
Longo v. MacLaren Art Centre
, 2014 ONCA 526, [2014]
    O.J. No. 3242, at para. 39. It has also been said that:

A palpable error is one which is clear to the
    mind or plain to see, so obvious that it could be easily seen or known or
    readily or plainly seen. An overriding error is one which had a sufficiently
    decisive effect, such that it would justify intervention and review on appeal:
1632093
    Ontario Inc. (Turn-Key Projects) v. York Condominium Corporation No. 74
,
    2020 ONCA 843, 328 A.C.W.S. (3d) 66, at para. 1.

[15]

The application judge made no such error. She
    gave thorough and cogent reasons for her findings of fact, some of which were
    based on her assessment of the credibility of the respondents witness. Her
    findings of fact are entitled to deference and are dispositive of this appeal.

[16]

The appeal is dismissed. We did not receive
    submissions on costs. If costs are sought, they may be addressed by written
    submissions. The respondent shall serve and file its submissions within 10 days
    of the issuance of the reasons. The appellant shall have 10 days from receipt
    of the respondents submissions to serve and file its submissions. The
    submissions shall not exceed three (3) double-spaced pages, excluding cost
    outlines. They shall be filed with the Registrar of this Court, and copied to
    the opposing party, either by email or by ordinary mail.

G.R.
    Strathy C.J.O.

S.E.
    Pepall J.A.

G.
    Pardu J.A.


