Ontario: a claim for common area fees is subject to the RPLA

In 2373322 Ontario Inc. v. Nolis, Justice Broad held that a claim by a landlord against a tenant for failure to pay common area maintenance charges under a commercial lease is subject to the six year limitation period in s. 17 of the Real Property Limitations Act.

The decision includes a useful summary of the relevant principles:

[57]           The tenant submits that all or a portion of the landlords’ claim for arrears of additional rent is barred by the Limitations Act, 2002 S.O. 2002 c. 24, Sch. B, which provides for a two year limitation period for bringing action for an injury, loss or damage that occurred as a result of an act or omission. The tenant submits that the Limitations Act, 2002 applies to the landlords’ claim and not the Real Property Limitations Act R.S.O. 1990, c. L.15 (the “RPLA”) as it does not constitute a claim for “rent” under the RPLA.

[58]           It is noted that, pursuant to ss. 2 (1)(a) of the Limitations Act, 2002, that Act applies to any claim to which the RPLA does not apply.

[59]           In the case of Pickering Square Inc. v. Trillium College Inc. 2014 ONSC 69 (S.C.J.) Mew, J. held, at para. 27, that with the enactment of theLimitations Act, the Legislature created a single, comprehensive general limitations law that is to apply to all claims for injury, loss or damage except, in relevant part, when the RPLA specifically applies, and that accordingly, the application of the Limitations Act should be construed broadly and the RPLAnarrowly.

[60]           Justice Mew conducted a careful review of the historical and current meanings of “rent” and concluded that “rent” in s. 17 of the RPLA means “the payment due under a lease between a tenant and landlord as compensation for the use of land or premises.”

[61]           S. 17 of the RPLA provides as follows:

17. (1) No arrears of rent, or of interest in respect of any sum of money charged upon or payable out of any land or rent, or in respect of any legacy, whether it is or is not charged upon land, or any damages in respect of such arrears of rent or interest, shall be recovered by any distress or action but within six years next after the same respectively has become due, or next after any acknowledgment in writing of the same has been given to the person entitled thereto or the person’s agent, signed by the person by whom the same was payable or that person’s agent. R.S.O. 1990, c. L.15, s. 17 (1).

[62]           None of the cases cited by the tenant in the case at bar, in support of its submission that the landlords’ claim in this case does not constitute “rent”, dealt with claims for common area maintenance charges of the nature claimed by the landlords in this case. The claims under consideration in Pickering Square were for damages for the tenant’s failure to occupy and carry on business at the premises and resulting from the tenant’s failure to restore the premises to the required condition at the end of the lease term. The claims in Bill Co. v. Yellowstone Property Consultants Corp. 2012 ONSC 5116 (CanLII), 2012 ONSC 5116 (S.C.J.) similarly constituted claims for damages. The claim in Coffee Culture Systems Inc. v. Krukowski 013 ONSC 1588 (S.C.J.) (S.C.J.) was by the tenant against the landlord for breach of the lease.

[63]           In Toronto Standard Condominium Corporation No. 1487 v. Market Lofts Inc. 2015 ONSC 1067 (CanLII), 2015 ONSC 1067 (S.C.J.) Perell J. stated at para. 58 “that the parties to a lease described a payment as rent or additional rent is not determinative of whether the charge is a rent charge, and if it is just a contractual charge it will be governed by the Limitations Act, 2002.

[64]           In contrast to the cases cited by the tenant, common area charges of the nature claimed by the landlords in the present case were found to constitute “rent” for the purpose of the RPLA in the case of Ayerswood Development Corp. v. Western Proresp Inc. 2011 ONSC 1399 (CanLII), at para. 31.

[65]           Although the characterization by the parties of “additional rent” as” rent” in the lease, as amended, is not determinative, I find that the additional rent, constituting “CAM charges” is properly characterized as “payments due under a lease between a tenant and landlord as compensation for the use of land or premises” and therefore constitutes “rent” for the purposes of the RPLA, which provides for a six year limitation period. Conversely, even if my conclusion, as set forth above, that the parties did not intend, by the amendment agreement, to exclude “additional rent” from “rent” under the lease is wrong, the landlords’ claim for additional rent would still constitute “rent” for the purposes of the RPLA.