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Indigo Books & Music Incorporated v. Manufacturers Life Insurance Company [2009] O.J. No. 1121 (Ontario Superior Court of Justice, March 18, 2009, T.R. Lederer J.) This case involved the reliability of using working papers created by the assessment authority in determining the tenant’s contribution to realty taxes. The landlord and tenant entered into a lease a few days after business taxes and separate assessments for premises in multi-tenant commercial buildings were legislatively eliminated. The lease stated that the landlord would allocate taxes to the tenant’s premises on the basis of a separate assessment. However, if no such separate assessment was available or if no “other information deemed sufficient by the landlord” was available to make the calculations, then the tenant’s contribution would be the tenant’s proportionate share of the landlord’s taxes. The landlord calculated the tenant’s contribution to realty taxes based on its proportionate share. The tenant claimed that the landlord did not properly adhere to the hierarchy set out in the lease. The tenant maintained that there was “other information” (found in the assessor’s working papers prepared for the building) which should have been deemed sufficient by the landlord to make the calculations. In the tenant’s view, the landlord should not have used its proportionate share for the calculations. In determining whether the “other information” found in the working papers was reliable, the Court referred to previous case law dealing with this issue. In prior decisions, courts have noted that the calculations made in working papers are informal and discretionary and are not governed by legislation. The assessments found in the working papers are not apportioned on a tenant-by-tenant basis. Working papers are not intended to apply to individual premises; rather they demonstrate a value for the entire property. Accordingly, the calculations are not considered reliable on an individual basis. The Court also noted that disagreements between property owners and assessment authorities regarding the assessed value of a property are usually resolved through discussion, negotiation and settlement but assessors do not always adjust their working papers to reflect these settlements. The Court held that working papers could not be considered accurate or reliable and concluded that it was within the landlord’s discretion to deem the information in the working papers insufficient to complete the calculations of additional rent under the lease. Tradedge Incorporated (c.o.b. Shoeless Joe’s) v. Tri-Novo Group Incorporated [2009] O.J. No. 1857 (Ontario Superior Court of Justice, May 4, 2009, p. Lauwers J) The tenant leased space from the landlord to operate a “Shoeless Joe’s” restaurant. The tenant’s business began to suffer and the landlord was aware of the tenant’s financial difficulties. The tenant and a proposed assignee entered into a sale agreement, which was conditional upon an assignment of the lease. Under the lease, the tenant could not assign without the prior written consent of the landlord, which could not be unreasonably withheld. The landlord was concerned about the proposed assignee’s financial condition and refused to consent to the assignment unless the proposed assignee agreed to pay an increased rent and inducements. The landlord and the proposed assignee entered into negotiations for the new terms, including increased rent. The proposed assignee agreed to the increased rent and to enter into an assignment and amending agreement with the landlord. When the landlord delivered the agreement to the proposed assignee, it contained additional terms that the proposed assignee had not agreed to. Many of the amendments in the agreement had nothing to do with the proposed assignee’s financial condition. The proposed assignee refused to agree to the additional terms. The proposed assignee offered to post security by way of a letter of credit in the amount of $100,000.00. In addition, the proposed assignee provided the landlord with a letter from its bank confirming that it had been approved for a $250,000.00 loan, including $150,000.00 for renovations to the premises. The proposed assignee and the landlord continued to negotiate and eventually agreed on the financial terms of the assignment: the proposed assignee would pay the increased rent and a deposit towards the landlord’s legal costs for the assignment agreement. Despite the agreement between the landlord and the proposed assignee, the landlord did not provide its consent and the lease was not assigned. The tenant vacated the premises and the landlord leased the space directly to the proposed assignee, requiring it to pay $175,000.00 as an inducement to signing the lease. The tenant brought an application for a determination as to whether the landlord unreasonably withheld its consent to the proposed assignment. The Court found that the landlord had a collateral agenda, which was to increase the rent. The landlord saw the assignment as an opportunity to increase rent. The Court noted that the increased rent would not have had the effect of increasing the landlord’s security, but rather would have increased the landlord’s risk that the proposed assignee would fail. In the Court’s view, the landlord would not have been worse off by consenting to the assignment; in fact, considering the tenant’s failing business, the landlord may have been better off by consenting in light of the fact that the proposed assignee was better funded and planned to improve the premises. The Court held that it was not legitimate for a landlord to insist on increased rent to compensate for the perceived financial weakness of a proposed assignee, and ruled that the landlord unreasonably withheld its consent to the assignment. Linens ‘N Things Canada Corp. (Re) [2009] O.J. No. 2091 (Ontario Superior Court of Justice In Bankruptcy and Insolvency, May 22, 2009, Registrar S.W. Nettie) The landlord and tenant entered into a lease for a 10

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