Executive Summary: Key Legal and Evidentiary Issues

• Central dispute concerns whether “Net Rentable Area” under para. 4 of Schedule “D” to a commercial lease includes mezzanine floor space when calculating rent.
• Interpretation of the lease’s defined terms is resolved using ordinary contractual construction principles, with the court rejecting efforts to rely on industry custom or expert opinion to rewrite clear wording.
• The architect’s certificates are found deficient because they certify “gross leasable area,” ignore the lease-line methodology (including recessed storefront areas), and never actually certify the “Net Rentable Area” as defined in the lease.
• Expert evidence on standard commercial leasing practice (that mezzanines are usually rented and paid for) is held not to override the specific two-dimensional measurement formula agreed to in para. 4 of Schedule “D.”
• A Tenant’s Acknowledgement / estoppel certificate given to a mortgagee, reciting 60,536 sq. ft. and the rent then being paid, is treated as a point-in-time factual statement and not as a binding waiver of the tenant’s right to dispute the lease-based Net Rentable Area.
• The proceeding is a Rule 14.05(3)(d) application limited to interpreting the lease, leaving any consequential rent adjustments or monetary remedies to be determined separately if necessary.

Background and parties

The case arises from a long-term commercial lease between 2440537 Ontario Inc., operating as Nations, and Canadian Property Holdings (Winston Churchill One) Inc., the owner of a Mississauga shopping centre. Nations operates a supermarket in the plaza under a lease signed in 2014, with a term commencing January 30, 2017. Before the lease commenced, the landlord was obliged under Schedule “C,” clause 1(c), to deliver a “clean shell” by demolishing all interior improvements, which included two existing mezzanines within the leased premises. During the build-out phase, however, Nations decided that the mezzanines would be useful and informed the landlord that they could remain. The mezzanines were therefore not demolished, and Nations performed some improvements to them to suit its operational needs. From the outset of occupancy, Nations disputed the way the landlord calculated rental area, but it continued to pay rent while reserving its position. The dispute eventually crystallized into an application issued in March 2018, though it was only heard in February 2026.

Facts and the evolution of the rent calculation dispute

The leased premises are designated as Unit 18 and are described in section 1.02 of the lease as containing a Net Rentable Area of approximately 55,000 square feet, shown as outlined in red on the site plan attached as Schedule “B.” That description is expressly made subject to measurement or calculation by an architect, Ontario land surveyor, or other person designated by the landlord, “in accordance with the criteria set forth in Schedule ‘D.’” The lease also provides that the boundaries of the leased premises extend vertically from the top of the structural subfloor to the height of the demising walls as determined by the landlord. Before the commencement date, the landlord was required by section 1.05(b) to provide a certificate as to the Net Rentable Area of the leased premises, measured in accordance with Schedule “D,” prepared by the landlord’s architect or land surveyor, and that certificate would form part of the lease. On December 7, 2016, architect Frank Nucifora (Alex Rebanks Architects Inc.) issued a certificate stating that the “gross leasable area” of the Nations unit was 60,536 square feet, including mezzanines. The same certificate recorded that the ground floor area alone, excluding mezzanines, was 55,146 square feet. The measurement was based on ANSI/BOMA standards, a common industry methodology. Nations promptly objected through counsel, noting that the certificate used a gross leasable concept and ANSI/BOMA methodology, rather than the bespoke Net Rentable Area methodology in Schedule “D.” After the objection, the landlord’s property manager sent the architect a copy of Schedule “D,” which he had not previously seen. The architect then reissued the certificate with the same date and identical drawing but simply replaced the ANSI/BOMA reference with a statement that the area calculations were based on Schedule “D” of the lease. Importantly, neither version of the certificate used the defined term “Net Rentable Area,” and the drawing itself continued to exclude recessed storefront space behind the lease line, contrary to the express wording of para. 4 of Schedule “D.” Despite the tenant’s repeated objections, Nations continued to be charged and to pay rent based on a figure of 60,536 square feet—an effective uplift over the approximately 55,000 square feet originally contemplated—while maintaining its position that the mezzanine space should not be counted in the Net Rentable Area as defined in the lease.

Key lease provisions and the definition of “Net Rentable Area”

The heart of the dispute lies in para. 4 of Schedule “D,” which defines “Net Rentable Area” for the leased premises and other rentable premises in the shopping centre. That paragraph has two conceptual parts. First, it defines Net Rentable Area as the area in square feet (or square metres) “as certified by the Architect or Landlord’s Ontario Land Surveyor,” measured from: (a) the exterior face of all exterior walls, doors and windows of the premises; (b) the exterior face of all interior walls, doors and windows separating the premises from common areas and facilities; and (c) the centre line of interior walls separating the premises from adjoining leasable premises. These measurement points function as the perimeter boundaries used to calculate the internal two-dimensional area of the leased “shell.” Second, para. 4 clarifies that the Net Rentable Area of the leased premises and of the shopping centre “includes all interior space whether or not occupied by projections, structures or columns, structural or non-structural.” It further states that if a storefront is recessed from the lease line, the area of that recess “for all purposes lies within” the Net Rentable Area. The court reads these words as confirming that interior features cannot be carved out of, or added onto, the perimeter-based area. In other words, the architect or surveyor must measure from the specified perimeter points and treat interior projections and structural elements as neutral: they cannot be deducted from the measured area, nor can they be used to enlarge it. On this interpretation, the presence of mezzanines—additional floor surfaces within the vertical envelope of the unit—does not increase the Net Rentable Area, because the lease definition is fundamentally two-dimensional, concerned with the horizontal footprint at the lease line. The judge notes that, in theory, Nations could have added an entire second floor within the demised volume without changing the Net Rentable Area, because the defined measurement is based solely on the outlined shell. By contrast, para. 3 of Schedule “D” defines the “Gross Floor Area” of the shopping mall and specifically excludes the basement storage facility, underscoring that “gross” and “net” are different defined concepts in the document.

The application under Rule 14.05(3)(d) and the court’s interpretive task

Nations brings the proceeding under Rule 14.05(3)(d) of the Rules of Civil Procedure as an application for the court’s interpretation of a written instrument, not for a full suite of consequential monetary remedies. The notice of application seeks two determinations: the meaning of Net Rentable Area under the lease, and whether the mezzanines are to be included in that calculation. The judge stresses that this is a “pure” interpretive application: it is not for the court in this proceeding to decide what specific financial adjustments, refunds, or damages may flow from the interpretation. Applying standard principles of contractual interpretation, the court insists on reading the lease as a whole and giving the words their ordinary and grammatical meaning. The fact that Nations allowed the mezzanines to remain does not, on its own, change the pre-agreed measurement methodology. Nor does it matter, for purposes of interpretation, whether the landlord saved money by not demolishing the mezzanines or whether the rent uplift exceeded those savings; there is no evidentiary balancing of those commercial impacts that alters the contractual text. The court concludes that para. 4 of Schedule “D,” read together with the main body definition of “Leased Premises” in section 1.02, clearly describes a shell measured at the lease line. The Net Rentable Area calculation does not contemplate adding separate mezzanine floor area on top of the two-dimensional perimeter measurement.

The architect’s certificate and the role of expert certification

The landlord argues that the architect’s certificate, together with certain lease provisions, makes the architect’s determination binding if not challenged within 30 days. Clause (e) of section 1.06 and section 9.04 of the lease provide that in the event of a dispute about Net Rentable Area, the architect’s certificate is binding after a 30-day challenge period. The judge notes that, in principle, this kind of expert determination mechanism is common and enforceable. Courts frequently uphold contractual arrangements where architects, engineers, valuators, or other experts are appointed to resolve technical questions such as measurements, construction progress, or financial adjustments, so long as the expert acts reasonably and within the mandate defined by the contract. The decision surveys prior case law where experts, rather than arbitrators, are empowered to decide matters like whether basements are included in “gross leasable office space” for operating cost allocation, or where valuators and accountants fix financial figures in shareholder or partnership agreements. At the same time, the court emphasises that an expert cannot rewrite the contract or step outside the scope of the task assigned. The architect here never actually certified the Net Rentable Area as that term is defined in para. 4 of Schedule “D.” His original certificate measured “gross leasable area” using ANSI/BOMA and expressly included mezzanines. His “revised” certificate swapped out the methodology wording to cite Schedule “D” but retained the identical drawing that still excluded recessed storefront areas the lease required to be included. Because the certificates neither use the correct defined term nor apply the lease’s measurement criteria at the lease line, they do not qualify as binding certifications of Net Rentable Area under the lease. The landlord also did not file any affidavit from the architect explaining the error or confirming that “gross” was an inadvertent typographical substitution for “net.” The judge accepts that such a mistake is plausible in isolation, but finds that the pattern—failing to read the lease, then simply changing a note without changing the underlying drawing or method—undermines confidence in the certification. On these facts, the expert mechanism does not rescue the landlord’s position.

Expert evidence on commercial leasing practice

Canadian Property Holdings further relies on an expert in commercial real estate, Jeff Ross, who opines that mezzanines should be included in Net Rentable Area because: Nations is actually using them; they are interior space; and it is standard in Ontario for tenants to pay rent for mezzanine areas. His opinion effectively equates “Net Rentable Area” with the total space the tenant can use, rather than the specific perimeter-based formula set out in para. 4 of Schedule “D.” The court accepts that, in general practice, it may be commercially normal to charge rent for mezzanines and that tenants would not expect to use such areas free of charge. But that commercial common sense cannot override the actual words of the lease. The judge underscores that industry custom and expert opinion are subordinate to clear contractual wording: neither the expert nor the court can rewrite a carefully defined term bargained for by the parties. The opinion is also notable for what it does not address: it offers no real analysis of the distinction between “net” and “gross” concepts within the same Schedule “D,” and says little about the difference between “leasable” and “rentable” area beyond linguistic observations. In short, the evidence of standard practice is not sufficient to change how the defined term Net Rentable Area must be read.

The tenant’s acknowledgement / estoppel certificate

Another key document is a “Tenant’s Acknowledgement” dated June 26, 2017, provided by Nations to the landlord’s mortgagee in the context of refinancing the shopping centre. In that acknowledgement, Nations confirms that it occupies 60,536 square feet and that the June 2017 monthly rent of $116,027.33 has been paid. This document replaced a 2016 acknowledgement referring to 55,000 square feet. The landlord characterizes the 2017 acknowledgement as an estoppel certificate that should bind Nations to the higher area figure used in the architect’s certificate, thereby foreclosing any later Net Rentable Area dispute. The court rejects this argument. It treats the acknowledgements as honest, point-in-time factual statements made for the benefit of the mortgage underwriter: in 2016, the unit was understood as 55,000 square feet, and by June 2017 the parties were operating on the basis of 60,536 square feet with a corresponding rent. Neither acknowledgement explicitly purports to fix the Net Rentable Area as defined under the lease, nor to waive the tenant’s right to rely on the lease wording for future disputes. Just as the 2016 version would not prevent the landlord from asserting a higher figure later, the 2017 version does not stop Nations from challenging the inclusion of mezzanines in Net Rentable Area under para. 4 of Schedule “D.” Accordingly, the estoppel certificate does not determine the legal issue in this application.

The court’s determination on Net Rentable Area and the practical way forward

Having reviewed the lease, the architect’s flawed certificates, the commercial leasing expert’s opinion, and the estoppel documents, the court concludes that the Net Rentable Area defined in the lease does not include the mezzanine areas. The measurement methodology in para. 4 of Schedule “D” is two-dimensional, tied to the perimeter at the lease line, and is not altered by the internal configuration or by the existence of mezzanine floors. The architect’s 55,146 square foot figure for the ground floor may appear close to the intended Net Rentable Area, but even that calculation is suspect because his drawing excluded recessed storefront areas that the lease expressly requires to be included. As a result, the court holds that the architect’s measured figures cannot safely be adopted wholesale as the contractual Net Rentable Area. Instead, the judge indicates the only valid and reliable way forward is to have the landlord’s architect remeasure the shell strictly in accordance with para. 4—i.e., at the lease line and including recessed areas, without counting mezzanine floor area as additional space. The judgment even contemplates the possibility of further dispute: if the architect were simply to reissue another certificate substituting the word “net” for “gross” while still including mezzanines, Nations’ counsel is expressly given leave to summon him for oral testimony at a continued hearing.

Outcome, successful party, and monetary award

In the conclusion of the reasons, the court answers the interpretive question posed in the application by declaring that the Net Rentable Area, as defined in the lease, does not include the mezzanines. This is the core relief sought by Nations. The court also notes that because the architect did not follow the lease-mandated methodology and never properly certified the Net Rentable Area, the parties cannot rely on his existing measurements for purposes of rent. The landlord’s architect must undertake a proper re-measurement at the lease line for the shell, without mezzanine additions and without excluding recessed storefront areas. On costs, the court comments on the modest bill submitted by Nations’ counsel and urges the parties to resolve costs amicably, given that they must continue in a long-term landlord–tenant relationship until at least 2037. Failing agreement within 14 days, Nations may deliver written costs submissions and the landlord may respond within a further 14 days, after which the judge will decide costs on the paper record. No specific amount of costs, damages, or rent adjustment is set in this decision. Overall, the successful party on the legal issue is the tenant, 2440537 Ontario Inc. o/a Nations. The judgment clearly favours its interpretation that mezzanine space is excluded from the defined Net Rentable Area used to calculate rent. However, the decision is deliberately confined to interpretation under Rule 14.05(3)(d), and it does not quantify any monetary award, back-rent refund, damages, or final costs figure. The total amount ordered or granted in Nations’ favour therefore cannot be determined from this decision.