Canadian Lawyer InHouse

By David R. Thompson, Partner, and Karsten T. Lee, Associate, WeirFoulds LLP A small pet store is located in the middle of a traditional "barbell-shaped" enclosed mall (with two anchors at either end of the mall). Due to the departure of one of the anchor tenants, foot traffic in the mall decreased considerably. In order to salvage the profitability of the mall, the landlord decided to completely redevelop it. The redevelopment entailed the following: 1) only a part of the interior mall would remain, 2) a new part of the mall would be built with the tenants in the new part having exterior access only, and 3) access to the remaining anchor tenant would primarily be from the outside. The lease of the pet store provides that the relocated premises must be "similar in location" to the original premises. To which part of the redeveloped mall can the landlord relocate the pet store without being in breach of its obligation under the relocation clause of the lease? (a) In part of the smaller interior mall close to the remaining anchor tenant (b) In the new part of the mall with exterior access only (c) Either (a) or (b) (d) Neither (a) nor (b) 1 2 Managing the evolution of commercial spaces Whether it is to welcome new American tenants (i.e. Target, J. Crew, and Crate & Barrel), to convert buildings to become LEED certified, or to entice more shoppers to come into their cen- tre, many shopping centres and office buildings in Canada have recently completed, or are in the midst of, expansion and modern- ization. For example, in Toronto alone, a major renovation of two food courts at the Eaton Centre has occurred, Yorkdale Shopping Centre is undergoing a major expansion to accommodate more tenants, and First Canadian Place has re-skinned its exte- rior walls and windows and renovated its common areas and retail spaces. How do you think different types of redevelopment affect landlords and tenants? 3 A landlord owns a 20-storey office building with a retail component on the ground floor and in the basement of the building. As part of its efforts to modernize the office portion of the building, the landlord has installed many energy-efficient features into the interior and exterior parts of the offices. The landlord's efforts were successful, and this has resulted in significant operating cost savings with respect to the office portion of the building. The retail component of the building was unfortunately not part of the renovations; however the tenants in this retail area now want their operating costs to be reduced due to the recent changes in the office area. Can the tenants in the retail component on the ground floor and in the basement benefit from the operating cost savings in the office portion of the building? (a) Yes (b) No 4 (c) It depends A lease for a jewelry store contains a termination clause, which provides that "in the event of a redevelopment of all or any part of the shopping centre, then the landlord may terminate the lease." The landlord decided to redevelop that portion of the shopping centre at the opposite end of the mall from the jewelry store. However, the landlord exercised its option to terminate as set out in the lease. The tenant objected to the termination and brought an action arguing that the jewelry store premises was not required by the landlord in order to carry out the redevelopment, therefore, the landlord cannot terminate the lease pursuant to the termination clause. Does the termination clause allow the landlord to terminate the jewelry store's lease? (a) Yes (b) No 5 (c) It depends INHOUSE WWW.CANADIANLAWYERMAG.COM/INHOUSE AUGUST/SEPTEMBER 2012 • 15 A two-storey building has been leased by a restaurant. The restaurant operates from the ground floor of the building and the tenant has subleased the whole second floor of the building to a hairdresser. The landlord now wishes to demolish the entire building to make way for redevelopment. The restaurant has agreed to enter into a surrender agreement with the landlord for its head lease of the entire building. Is the sublease automatically terminated and is the hairdresser immediately required to deliver vacant possession of the second floor of the building to the landlord at the surrender date of the restaurant lease? (a) Yes (b) No As part of its efforts to become more environmentally friendly, the landlord wishes to install solar panels on the roof of all of the buildings in a big-box open-air shopping centre. A major electronics retailer leases space within one of the buildings comprising the shopping centre. The building in which the electronics store is situated also contains a pharmacy, a restaurant, and a shoe store. The electronics retailer has taken issue with the installation of solar panels on the roof of its own premises. Do they have the right to prevent the landlord from installing the solar panels on its roof? (a) Yes (b) No

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