Leasehold Interest

From Riverview Legal Group

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved: 2024-06-13
CLNP Page ID: 1969
Page Categories: [Legal Principles], [Contract Law], [Contract Law, Leases, & Sub-Letting (Commercial Tenancy)], [Contract Law, Leases, & Sub-Letting (LTB)]
Citation: Leasehold Interest, CLNP 1969, <>, retrieved on 2024-06-13
Editor: Sharvey
Last Updated: 2022/08/28

Naegele v. Oke, 1916 CanLII 577 (ON CA)

Page 504:

Neither can the arrangement be construed to be a lease, though the parties so characterise it, for it is of the essence of a lease that the lessee acquire the exclusive possession of the leased premises: Watkins v. Milton-next-Gravesend Overseers (1868), L.R. 3 Q.B. 350; Glenwood Lumber Co. v. Phillips, [1904] A.C. 405. No exclusive possession of any part of Halliday's lands was acquired by Naegele.
The written agreement of September, 1911, is, I think, to be construed as relating to the existing ram and pipes and to their then use for supplying water to lot 13. The evidence shews clearly that it was drawn to confirm and continue that which had been in existence and in actual use under an oral agreement for seven or eight Years, and was not a general right to take water. That which the plaintiff Naegele acquired under his agreement with the Hallidays was, therefore, I think, a license personal to himself, good for 49 years, subject to earlier determination by his death, or because he was no longer in occupation of the Naegele farm, so as to enable him to enjoy the benefits of the license.
No estate in the lands of Halliday (or Oke) was acquired by Naegele. The license does not include " assigns," and so "was not transferable.
At the time this action was instituted, Francis Naegele had sold the lands to which the hydraulic ram conveyed the water, and Pitblado, the purchaser, was in possession, so that, on the date when the writ was issued, he (Francis) had no rights capable of enforcement by the Court.
As Naegele's interest amounts only to a personal license by his grantors and not to any estate or interest in the lands of his grantors, I do not think that Oke was in any way bound (even with notice) by the license granted by his predecessor in title. The right was a personal right given by the Hallidays to Naegele. Not being an interest in the lands, Oke on his purchase took the land clear of any right or license.


Attorney General of Canada v. Lees (No. 2), 1977 CanLII 1546 (SKDC)[2]

[23] In brief, with possible special-case exceptions, a lease, by its very nature and substance, is essentially an exclusive possessory interest in land, for general or specific purposes.

[24] In cl. 2 the parties expressly agreed that the permit did not create an exclusive right to possession, by implication or otherwise. At least a cursory examination of the terms is necessary to make sure that the parties meant what they said.

[25] Because of the exclusive possessory right of a tenant under a lease, it is usual to provide that the demised lands shall revert to the landlord upon the termination of the lease. Clause 8 contains the only provision which might be construed as a reversionary right in the “landlord”. But this is limited to fences. Fence posts may be fixtures and therefore an interest in land. But fencing is ancillary to grazing. This provision is equally consistent with a licence to graze. A requirement to maintain fences did not prevent the sale of grazing rights to be held a licence in Mogg v. Yatton Overseers (1880), 6 Q.B.D. 10.

[26] The next clause, being cl. 9, contains the strongest and really the only implication that the possession granted was exclusive. Leases reserve to the landlord specific rights to enter. This is because of the exclusive nature of the tenant’s possession. Conversely, in a licence, it is unnecessary to mention the grantor’s right of entry because the licencee’s possession is not exclusive. If the permit is a licence, perhaps the clause would tend to forestall argument in the event of a petty encroachment on the “licencee’s” right to graze. But in my view, it could not have the effect of abrogating or materially limiting his grazing rights. He has paid the substantial sum of $15,000 for this “licence” and would be entitled at least to the kind and degree of possession which would assure him of the substance of the contract, the right to graze cattle. In the absence of the term, the issue would be unchanged in the event the “licence” were disputed in this respect. With or without the term, the issue would be, Did the grantor’s assertion of a right to possession materially interfere with those rights he contracted to the “licencee”? Perhaps it was meant to give written assurance to the native people who clearly had some interest in the land. Whatever practical considerations there may have been, if the permit is a licence only, there is no meaning an law to cl. 9. The clause by its very existence, therefore, implies to the permittee the exclusive possessory right found in a lease.

[27] The only other clause bearing on this point is cl. 15, a clause for the obvious purpose of protecting the permittee’s cattle. This clause, conversely to cl. 9, implies the absence of exclusive possession in the permittee. Only during grazing season is the right to possession of the grantor limited, and even then, only as to hunting.

[28] I conclude that there is nothing in the counterbalancing implications which, on the whole of the document, would justify a finding against the express provisions of cl. 2. The permittee did not have exclusive possession.


Razor Management Inc. v. Municipal Property Assessment Corporation, 2018 ONSC 3042 (CanLII)[3]

[15] In determining a landlord and tenant relationship, the principles set out in Exchange Corp. Canada Inc. v. Mississauga (City), [2014] O.J. No. 694, 2014 ONCA 113, 2014 CarswellOnt 1526 ("Exchange Corp.")[4] are instructive. In that case, at para. 22, the court cites British American Oil Co. v. DePass, 1959 CanLII 125 (ON CA), [1960] O.R. 71, [1959] O.J. No. 710 (C.A.)[5] for the principle that whether an agreement creates the relationship of landlord and tenant or merely that of licensor and licensee will depend on the intention of the parties as ascertained by a review of the document.

[16] The Divisional Court in the Exchange Corp. case identified the following elements in distinguishing a tenancy from a licence agreement: (i) the creation or transmission of an estate in the tenant and a transfer of control of the premises to the tenant (at para. 9); (ii) exclusive possession granted to the tenant in relation to the purpose for which occupation is intended; and (iii) restrictions imposed on the tenant to the extent that they undermine the exclusivity of possession (at para. 23).

[17] For the reasons that follow, I find that RMI is a tenant within the extended meaning of the definition of tenant in the statute. Consequently, the licensed land is liable to assessment and taxation.


[20] Regarding the licence agreement between the parties, RMI submits that the agreement is referred to as a "licence" agreement, not a lease, the parties are referred to throughout the agreement as the "licensor" and the "licensee", and there is a prohibition against an interpretation of the agreement or any clause in a way that creates a different relationship between the parties. However, in a document pre-dating the licence agreement, dated October 26, 2011, which sets out recommendations for a shared use agreement between the parties, reference is made to a "possible Five Year lease renewal". The nature of the relationship created by the instrument under examination depends on the substance of the instrument and not its form or the form of the expressions used in it: Chatham (City) v. Raleigh (Township), 1964 CanLII 131 (ON SC), [1965] 1 O.R. 168, [1964] O.J. No. 816 (H.C.J.) ("Chatham (City)").[6]


[23] As noted, "tenant" for the purposes of the Assessment Act, includes an "occupant" and the person in possession other than the owner. In Mount Sinai Hospital v. Municipal Property Assessment Corp., [2003] O.J. 4295, [2003] O.T.C. 970, 126 A.C.W.S. (3d) 553 (S.C.J.), at para. 9, Karakatsanis J. set out the essential elements for rateable occupation, namely, (i) actual occupation; [page395] (ii) exclusivity for the particular purposes of the possessor; (iii) value or benefit to the possessor; and (iv) permanence (citing David Widdicombe, et al., Ryde on Rating, 13th ed. (London, Butterworths, 1976), at 26-27).


[35] In Gottardo, Laskin J.A. held, at para. 29[7], that mere transient use is not assessable. There must be some degree of permanence in the usage. I find that both parties meet the permanence test. The TDSB owns the licensed land on which the sports facility is situated. On that land it operates Monarch Park Public School and no evidence was led to suggest that it will not be operating this secondary school on these premises for the foreseeable future.

[36] The initial term of the licence granted to RMI, being 21 years less two days, is of considerable duration. RMI also has [page398] an office and personnel on the licensed land, who, according to the sworn evidence of Mr. Raizenne, are there all day, every day.

[5] [4] [3] [6] [7]

Gottardo Properties (Dome) Inc. v. Toronto (City of), 1998 CanLII 6184 (ON CA)[7]

[31] The licensees suggested that their occupancy of the SkyBoxes was too transient to be assessable. I would not give effect to this argument. Whether occupancy is transient or permanent depends on the context. Realistically the SkyBoxes are used only during sports and other entertainment events at the SkyDome. In that context the licensees' occupancy of the boxes is sufficiently permanent to be assessable.

[32] A second and important qualification on assessable occupancy or use turns on the concept of exclusivity. Although the requirement of exclusivity permeates the caselaw there have been few judicial explanations of the concept. In my view, the explanations that have been offered are not entirely satisfactory because they do not determine assessability when there is simultaneous occupancy. One explanation suggests that the exclusivity required is not absolute exclusivity but is related to the purpose of the occupancy or use. The occupancy or use must be sufficiently exclusive to permit the occupant to carry out the purpose for which it acquired an interest in the land. As Krever J. observed in Saga, supra, at p.78:

It is not difficult to discern in the case law the need for the exclusiveness of the occupation or use to be related to the purpose for which the land is occupied or used ...

[33] Similarly, Widdicombe et al., Ryde on Rating 13th ed. (1976), a leading English text on assessment states at p. 27: "that one of the ingredients of rateable occupation is that the occupation must be exclusive for the particular purposes of the possessor. ... Occupation is exclusive if the occupier can exclude all other persons from using the land in the same way as he does."



  1. Naegele v. Oke, 1916 CanLII 577 (ON CA), <>, retrieved on 2022-08-17
  2. 2.0 2.1 Attorney General of Canada v. Lees (No. 2), 1977 CanLII 1546 (SKDC), <>, retrieved on 2022-08-17
  3. 3.0 3.1 Razor Management Inc. v. Municipal Property Assessment Corporation, 2018 ONSC 3042 (CanLII), <>, retrieved on 2022-08-18
  4. 4.0 4.1 Exchange Corporation Canada Inc. v. Mississauga (City), 2014 ONCA 113 (CanLII), <>, retrieved on 2022-08-18
  5. 5.0 5.1 Re B.A. Oil Co. & Halpert, 1959 CanLII 125 (ON CA), <>, retrieved on 2022-08-18
  6. 6.0 6.1 Re City of Chatham and Township of Raleigh, 1964 CanLII 131 (ON SC), <>, retrieved on 2022-08-18
  7. 7.0 7.1 7.2 7.3 Gottardo Properties (Dome) Inc. v. Toronto (City of), 1998 CanLII 6184 (ON CA), <>, retrieved on 2022-08-18