Say What You Mean, Mean What You Say

DID YOU KNOW?

1.  That an exclusive use clause can unexpectedly handcuff a landlord's ability to enter into future leases?

The decision of William Ashley Ltd. v. Manufacturers Life Insurance Co. an Ontario Court decision, November 1, 1999 is illustrative of this.

2.  "and" can mean "or".

The Landlord in 420573 Alberta Ltd. v. 396401 Alberta Ltd., a September 1999 decision of the Alberta Court of Queen's Bench, found this out to its dismay.

1. THE ASHLEY'S CASE

Birks was a tenant in the Manulife Centre for a term of 10 years with renewal options. The first renewal option had to be exercised before April 30, 1997. Ashleys subsequently entered into a lease with a right of renewal. The Ashleys Lease contained an exclusivity clause ("Exclusivity Clause") giving Ashleys the right to be the exclusive vendor of certain goods within the Manulife Centre subject to "any right contained in existing leases (and renewals thereof) of premises in the Retail Component as of the date hereof". Thus, Birks existing lease was "grandfathered" and the clause did not apply to it.

Birks failed to renew its lease by April 30, 1997, however, carried on discussions with Manulife regarding a continuation of the relationship. Manulife told Ashleys that it was negotiating a lease with Birks for its existing space together with additional space on the concourse. Ashleys objected based on the Exclusivity Clause. Birks and Manulife soon entered into a "First Lease Renewal Agreement". Manulife claimed the Birks lease was renewed and was thus "grandfathered" from the Exclusivity Clause.

Ashleys applied for a declaration that Manulife breached the Exclusivity Clause and for an injunction enjoining it and Birks from entering into the new leases.

For the complete article view the document below.