What is the legal test for establishing that a contract for a lease is enforceable by stating that the lease will commence at the date of substantial completion of the leased premises?

Ontario, Canada


The following excerpt is from 1175777 Ontario Limited v. Magna International Inc., 2006 CanLII 39907 (ON SC):

It is clear from Canada Square that a specific commencement date is not required for there to be certainty. The commencement date can be fixed by linking it to a specific event such as substantial completion of the leased premises. This was the nature of the wording in Canada Square at p. 225: “The term of the lease will be for a period of thirty years (30) from the date of substantial completion of the building, including the Versafoods facilities.” The linking of the commencement date to substantial completion gave the agreement the certainty that it needed. At pp. 268-69, the court approved the trial judge’s reliance on the following law: I think that the trial judge was right to rely upon the statement of Evershed J. in Brilliant v. Michaels, [1945] 1 All E.R. 121 at pp. 127-28, which reads as follows: My opinion, therefore, is that a contract for a lease is enforceable notwithstanding that the commencement of the term may be expressed by reference to the happening of a contingency which is at the time uncertain provided that, at the time that the contract is sought to be enforced, the event has occurred and the contingency has happened. … As a matter of principle I can think of no valid reason why, if parties choose to agree that a lease is to commence on a future specified contingency, a court should not uphold their bargain. In many cases, of course, there will be sensible and practical reasons why parties would choose to proceed in this way.

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