Judgment of the Court
J.-In 1912, the Crown expropriated certain lands and premises in the city of Ottawa belonging to the appellant, on which the appellant carried on a brewing business. The compensation allowed by the Exchequer Court in 1914 was $233,852.83, and, the appellant having remained in occupation, the judgment fixed the yearly rental at the rate of five per cent. on this sum, less a reduction of $400 for a small portion of the lands not occupied by the appellant, thus making the yearly rental $11,292.60.
At that time there was in force in Ontario a statute known as An Act respecting the Sale of Fermented or Spirituous Liquors (R.S.O., 1914, ch. 215), which permitted free sale of intoxicating liquors by all persons licensed under the Act.
In the year 1916, the Ontario Temperance Act (6 Geo. V, ch. 50) came into force on the 20th of September, which prohibited the sale in the province of products such as were being manufactured by the appellant, for beverage purposes, thereby curtailing the output of appellant's products in Ontario.
On representation to the government to this effect, an Order in Council was passed on the 28th day of December, 1916, authorizing a lease to the appellant of the premises, for a term of five years, from the 10th August, 1916, at an annual rental of $5,000. The lease contained the following clause:
S.C.R.]
At the expiry of this lease, the appellant applied for a renewal for another term of five years from the 10th of August, 1921, and a renewal lease for this term was made accordingly, but at a rental of $8,000 instead of $5,000 per year. This lease also contains the clause set out above, and expired on the 10th of August, 1926. The lessee continued to occupy the lands, and thereby became a yearly tenant on the same terms.
On the 1st day of June, 1927, the Liquor Control Act (Statutes of Ontario, 1927, Ch. 70) came into force, and on the 13th day of June, 1927, a notice, signed by the Assistant Chief Architect of the Department of Public Works, was sent to the appellant, setting out the fact that the appellant was a yearly tenant of the premises, and that the lease contained the clause already quoted. The notice then proceeds:
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This notice was followed by negotiations by the appellant for the fixing of the rental at either the same amount then being paid, or at a lesser amount than the amount claimed. These negotiations were not successful, and the present action is to recover $13,478.56, with interest, representing the balance due for rent on the basis set out in this notice of the 13th of June, 1927. The appellant contends that it is not liable for any rent beyond the $8,000 per year mentioned in the lease.
The first contention is that the notice of the 13th of June, 1927, was not a sufficient notice under the terms of the clause of the lease quoted above, because not signed with the formalities required by law to bind the Department, and because the language of the last clause of the notice, quoted above, is not a definite statement that the rental will be increased, but merely that it is liable to be increased. We were all of opinion, on the argument, that this objection could not prevail.
The appellant's further contention is that the clause E quoted refers only to products actually manufactured by the appellant, and that it was therefore incumbent upon the respondent to establish as a fact that the change in the law had actually allowed or facilitated the manufacture or sale of the appellant's own products, and that no evidence had been offered to establish this fact.
In my view, the appeal turns upon the construction to be placed upon the language of the clause of the lease in question. I was much impressed by the argument that the words " products manufactured. by the said lessee " must mean the precise products manufactured by the lessees themselves, but on fuller consideration I have concluded that this language refers to products of the kind manufactured by the lessee.
On behalf of the appellant it was argued that, to arrive at the true meaning of this language as used in the lease, the surrounding circumstances, under which the lease was made, ought to be taken into consideration, and that these circumstances would point to the conclusion that the language of the clause deals only with the actual products of appellant's brewery, particularly as the lease should be regarded as dealing only with the rights and interests of the parties to it.
It was further argued that what was contemplated by the parties by the introduction of this clause was a change in the law of Ontario such as would permit a free sale of these products for beverage purposes to the public under conditions similar to those that prevailed prior to the Ontario Temperance Act, whereas the Liquor Control Act, that came into force on the repeal of the Ontario Temperance Act, permits a sale only to a single customer, namely, the government, represented by the Liquor Sale Commission, and therefore does not facilitate a sale of these products to the general public.
In my view, the parties had not in mind, in placing this clause in the lease, any particular kind of change in the law of Ontario that might take place, and were not in a position to foresee what change, if any, might take place; and therefore undertook to define, by the terms of the lease, S.C.R.]