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Limitations - RPLA (4). Pinnacle International (One Yonge) Ltd. v. Torstar Corporation
In Pinnacle International (One Yonge) Ltd. v. Torstar Corporation (Ont CA, 2024) the Ontario Court of Appeal allowed an appeal, here in a sublease profit-sharing dispute.
The court consider a s.17 RPLA ['Maximum of arrears of rent or interest recoverable'] versus Limitation Act application dispute:Issue 3: The LA 2002 applies to the claim for net profit under art. 8.1
[99] The motion judge concluded that the RPLA applied to Pinnacle’s claim for net “profit” under art. 8. 1 of the Lease because “the payments to Pinnacle by Torstar are rent and net profits earned from a sublease are payable as Additional Rent”. As a result, she found that the Claim was subject to a six-year limitation period.
[100] In my view, the jurisprudence of this court makes it clear that the motion judge erred in so concluding. The Claim is not based on an obligation to pay “rent”, as that term is defined in the RPLA. Rather, the Claim is for an alleged breach of a term of the Lease that is governed by the LA 2002. Accordingly, it is subject to a two-year limitation period.
[101] Section 17(1) of the RPLA provides that “no arrears of rent, or of interest in respect of any sum of money charged upon or payable out of any land or rent ... shall be recovered by any ... action but within six years next after the same respectively has become due”. “Rent” is defined in s. 1 the RPLA to include “all annuities and periodical sums of money charged upon or payable out of land”.
[102] In Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, 44 R.P.R. (5th) 251, aff’d on other grounds, 2016 ONCA 179, 395 D.L.R. (4th) 679, Mew J. observed that the word “rent” in s. 17 of the RPLA means a payment due under a lease between a tenant and landlord as compensation for the use of land and premises: at para. 36. He explained that it does not depend on whether the parties to the lease define a matter as “rent”. Rather, the obligation must be interpreted in light of the context, scheme, and object of the RPLA, and the law of limitations in Ontario: at para. 52. Otherwise, every amount payable to the landlord under the lease is to be treated as rent: para. 39.
[103] At paras. 24-27 of Pickering Square, Mew J. explains that the application of the LA 2002 should be construed broadly and that of the RPLA narrowly because with the enactment of the LA 2002 “the legislature created a single, comprehensive general limitations law that is to apply to all claims for injury, loss or damages except, in relevant part, when the RPLA specifically applies”. Determining whether a matter is “rent” within the meaning of the RPLA, by reference solely to the words used by the parties, would defeat the legislative purpose behind the LA 2002. The word “rent” in the RPLA has an objective meaning that parties cannot nullify by contract: at para. 40.
[104] Justice Mew went on to find that Pickering’s claim against Trillium for breach of covenant to operate its business continuously on the leased premises was governed by the LA 2002: at para. 56.
[105] An appeal to this court was taken on some aspects of the first instance decision in Pickering Square but no challenge was made to the applicability of the LA 2002. Indeed, there is nothing in this court’s Pickering Square decision that questions the applicability of the LA 2002. To the contrary, the court applied the LA 2002 in deciding such matters as when the limitation period began to run and whether certain obligations under the lease in question were statute barred.
[106] In Northwinds Brewery, this court quoted with approval Mew J.’s discussion of the meaning of rent in s. 17(1). It reversed the first instance decision and found that the RPLA applied to monthly payments by the tenant for exclusive occupation of a shed area because the payments “fit neatly” within the RPLA’s definition of “rent”, as they constituted “periodical sums of money charged upon or payable out of land”: at para. 25.
[107] However, Northwinds Brewery is factually very different than this case. The obligation to remit net profit under art. 8.1 of the Lease was not an “annuity” nor was it a “periodical sum of money charged upon or payable out of land”. Rather, Torstar was obliged to pay the landlord net “profit”, a variable amount calculated by reference to a formula in art. 8.1 which permitted Torstar to deduct “reasonable expenses” such as legal fees and real estate commissions from Torstar’s earnings from the sublease. Thus, even though art. 8.1 labelled the net profit Torstar was to pay the landlord as “Additional Rent”, that obligation was not to pay “rent”, within the meaning of s. 17(1) of the RPLA.
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