Meaning Out Of Thin Air: How Courts Resolve Contractual Ambiguities

In a recent Ontario Superior Court of Justice decision, the Court was tasked with determining whether certain costs related to an open-air atrium, a rent free fixturing period, and leasing commissions were all "reasonable" expenses in connection with a sublease transaction. Its decision turned on principles of contract interpretation. Incidentally, the decision also provides a cautionary tale about paying close attention to how sublease space - or in fact any space - is described in an agreement.

The Facts:

In Pinnacle International Inc (One Yonge) v. Torstar Corporation, the Landlord and the Tenant had previously entered into a Lease for the entire third floor of a building. According to the Lease, the rentable area of the third floor was 65,534 square-feet, 18,827 of which was an open-air atrium.