



COURT OF APPEAL FOR ONTARIO

CITATION:
Terrace
    Manor Limited v. Sobeys Capital Incorporated, 2012
    ONCA 782

DATE: 20121116

DOCKET: C55599

Weiler, Juriansz and Hoy JJ.A.

BETWEEN

Terrace Manor
    Limited

Applicant (Appellant)

and

Sobeys Capital Incorporated

Respondent (Respondent in Appeal)

Stephen Longo, for the appellant

Jennifer McAleer and Sarah Jane Turney, for the
    respondent

Heard and released orally: November 7, 2012

On appeal from the judgment of Justice Patrick J. Flynn
    of the Superior Court of Justice, dated May 2, 2012, reported at 2012 ONSC 2657.

ENDORSEMENT

[1]

Terrance Manor Limited appeals the judgment of the application judge
    dismissing its application for a declaration that the terms of the lease
    between it and its tenant, the respondent Sobeys Capital Incorporated, required
    that the amount of the property taxes payable by the respondent be calculated
    on a proportionate share basis, that is, based on the leased square footage
    in relation to the entire premises.

[2]

The central issue on this appeal is whether the tenants share of property
    taxes under the lease should be calculated on a proportionate share basis or
    whether there was sufficient official information to determine what the
    tenants taxes would have been if they had been separately assessed by the
    Municipal Property Assessment Corporation (MPAC).

[3]

Prior to 1998, Ontario municipalities issued separate bills for business
    taxes to each tenant.  As a result of amendments to the
Assessment Act
,
    R.S.O. 1990, c. A.31, effective in 1998, municipalities levy real property
    taxes based on a global assessment of the property by the MPAC.  Tenants no
    longer receive separate assessments.

[4]

The lease at issue was entered into before the amendments were enacted. 
    The appellant argues that the application judge erred in his interpretation of
    the lease, particularly in light of several court decisions rendered since the
    amendments to the
Assessment Act
.  These decisions interpreted various
    clauses in leases entered into prior to the amendments as requiring the tenants
    share of property taxes to be calculated as a proportionate share of the taxes
    assessed against the landlord.

[5]

We disagree.  In our view, the application judge was correct in his
    interpretation of this lease and we would accordingly dismiss the appeal.

[6]

As the application judge noted, what is at issue is the interpretation
    of the clause in this lease between the parties.

[7]

The lease provides that if a separate assessment for taxes in respect to
    the leased premises is not available, the landlord and the tenant shall use
    their reasonable diligent efforts to  obtain sufficient official information
    to determine what such separate assessments would have been if they had been
    made.  It further provides that the tenants share shall be determined by the
    landlord reasonably and equitably allocating a portion of the taxes levied,
    rated, charged or assessed against the Shopping Centre to the Leased Premises
    having regard to the generally accepted method of assessment and applicable
    elements utilized by the lawful assessment authority in arriving at the
    assessment of similar development if that method is known

[8]

The application judge found that MPACs assessment for the plaza was
    created from assessment data, on a unit by unit basis, as shown on the
    valuation records.  He concluded that the valuation records are official
    because they emanate from and are authorized by MPAC, which produces them to
    record the assessment data it collects under the
Assessment Act
.  Having
    held that the records were official, he found that the information they
    contained was sufficient to determine what the taxes to the tenant would have
    been if a separate assessment had been made.  He noted that the appellant had
    in fact used MPAC valuation records to apportion taxes to the tenant for the
    years 2004-2009.  Therefore, there was sufficient official information to
    determine what a separate assessment would have been.  There is no basis for
    disturbing these findings.

[9]

We agree with the application judge that the cases relied upon by the
    appellant are not of assistance.  The wording of the lease in question differs
    from that of the leases considered in those cases in significant respects.

[10]

The
    appeal is accordingly dismissed.  The respondent shall be entitled to its costs
    on a partial indemnity scale in the amount of $13,000, inclusive of
    disbursements and applicable taxes.

K.M. Weiler J.A.

R.G. Juriansz
    J.A.

Alexandra Hoy
    J.A.


