In Farm Boy Inc. v. Mobius Corp., the Ontario Court of
Appeal upheld the trial Court's finding in favour of the
Landlord and dismissed the Tenant's appeal. At issue was the
interpretation of the phrase "Area of Premises", as it
was not clearly defined in the Lease. The Lease required the
Landlord to maintain a parking ratio of 5.5 parking spaces per
1,000 square feet of "Area of Premises".
The Tenant brought an action against the Landlord for a breach
of contract claiming that the parking ratio was applicable to the
entire Shopping Centre and therefore the parking ratio failed to
provide the Tenant with the required number of parking spaces. The
Tenant claimed its business suffered and led to a loss of profits.
The Landlord took the position that the parking ratio only applied
to the Tenant's Premises and not the entire Shopping Centre.
Even if it was found that the parking ratio applied to the entire
mall, the Landlord claimed that the Tenant was unable to provide
sufficient evidence of actual damages suffered. The Landlord relied
on Merger Restaurants (c.o.b) Shakey's Restaurant v. D.M.E.
Foods Ltd. (c.o.b. Bonanza Restaurant), which showed that in
the case of a proven breach of contract, damages cannot be
recovered unless there is sufficient evidence proving that damages
flowed from the breach.
The Court determined that the parking ratio only applied to the
Tenant's Premises and not the entire Shopping Centre, but the
Landlord was still found to be in breach of its parking ratio
obligation. The Court noted that complaints regarding the parking
ratio were generally temporary and that the parking lot generally
accommodated the day-to-day needs of the Tenant's customers. In
the end, the Court held that Tenant failed to prove that it
suffered any loss as a result of the breach.
Based on this case, it would appear that Courts may consider the
everyday use of parking lots. Even if landlords do not abide by
terms of the parking ratio agreed to in a lease, they may fi nd
themselves free of liability if the general day-to-day use of a
parking lot does not hinder the tenant's customers.
From a tenant's perspective, if parking is
critical to your business then it would be prudent to bargain for a
contractual remedy for the landlord's failure to satisfy a
parking ratio (such as rent abatement or liquidated damages) to
ensure your landlord has incentive to comply.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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