Tenant allowed to file negligent pre-contractual misrepresentation claim, despite agreement clause:

Landlord-tenant dispute involves interpretation of commercial lease's entire agreement provision

Tenant allowed to file negligent pre-contractual misrepresentation claim, despite agreement clause:
Ontario Court of Appeals

In a recent landlord-tenant dispute, the Ontario Court of Appeal said that the trial judge considered the lease as a whole and properly concluded that the language of the lease’s entire agreement provision did not preclude the tenant’s claim.

Concord Adex Investments Limited, a residential condominium developer, built Concord Park Place in North York, Ontario. Spot Coffee Park Place Inc., whose business was part of a U.S.-based chain of cafés, wanted to lease commercial premises in Concord Park Place.

In September 2010, the parties entered into an offer to lease, which had an entire agreement clause stating that there were no covenants, representations, agreements, warranties, or conditions in any way relating to the offer’s subject matter, except as expressly provided. The formal lease executed in October 2010 also included this clause.

Spot Coffee opened its café. It then abandoned the premises in May 2013. It alleged that it suffered losses due to customer parking challenges. Concord Adex terminated the lease in June 2013.

In October 2021, Justice Susan Vella of the Ontario Superior Court of Justice awarded Spot Coffee $1,027,051.34 in damages. She made the following findings:

  • The parties, who were sophisticated, had a pre-existing commercial/retail landlord-tenant relationship
  • Concord Adex owed Spot Coffee a duty of care
  • Concord Adex negligently made inaccurate or misleading representations to Spot Coffee that its customers would have convenient access to free customer retail parking without restrictions and could access the café from the parking lot via an elevator
  • Concord Adex had an obligation to correct its misrepresentations if free, accessible, and nearby customer retail parking was not intended to be available
  • Spot Coffee reasonably relied on Concord Adex’s representations
  • The entire agreement provision did not prevent Spot Coffee from bringing a claim based on negligent pre-contractual misrepresentation
  • The subject matter of the lease did not include customer parking.

On appeal, Concord Adex alleged that the trial judge ignored articles 6.6(b) and 3.2 of the lease.

Landlord’s appeal fails

In Spot Coffee Park Place Inc. v. Concord Adex Investments Limited, 2023 ONCA 15, the Ontario Court of Appeal dismissed the appeal.

First, the appellate court held that the trial judge specifically considered the entire agreement provision and the issue of whether Concord Adex’s representations related to the lease’s subject matter.

Second, the Court of Appeal found that the trial judge considered article 6.6(c) of the lease. The rest of article 6.6, including article 6.6(b), did not address customer parking and instead covered matters like the landlord’s control over the building’s public utilities equipment and cost-sharing between the landlord and the tenant for service and maintenance costs, the court noted.

Third, regarding article 3.2, Concord Adex conceded that the parties failed to raise this provision at trial. Article 3.2 was unclear and lacking in detail of what certain of the common facilities included, what the common elements included, and what the landlord designated, the appellate court said.

Lastly, the Court of Appeal ruled that the trial judge reasonably concluded that the lease did not refer to customer retail parking. She was entitled to her interpretation that customer parking was not the lease’s subject matter and that the entire agreement provision did not preclude Spot Coffee’s claim, the court said.

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