Relief From Forfeiture (Commercial Tenancy)

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Date Retrieved:	2024-11-22
CLNP Page ID:	789
Page Categories:	[Eviction (Commercial Tenancy)], [Bailiff Services]
Citation:	Relief From Forfeiture (Commercial Tenancy), CLNP 789, <https://rvt.link/1z>, retrieved on 2024-11-22
Editor:	Sharvey
Last Updated:	2022/12/06

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Commercial Tenancies Act, R.S.O. 1990, c. L.7

19 (2) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease, other than a proviso in respect of the payment of rent, is not enforceable by action, entry, or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money to the satisfaction of the lessor for the breach. R.S.O. 1990, c. L.7, s. 19 (2).

20 (1) Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture, whether for non-payment of rent or for other cause, the lessee may, in the lessor’s action, if any, or if there is no such action pending, then in an action or application in the Superior Court of Justice brought by the lessee, apply to the court for relief, and the court may grant such relief as, having regard to the proceeding and conduct of the parties under section 19 and to all the other circumstances, the court thinks fit, and on such terms as to payment of rent, costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future as the court considers just. R.S.O. 1990, c. L.7, s. 20 (1); 2006, c. 19, Sched. C, s. 1 (1).

(2) This section and section 19 apply, although the proviso or stipulation under which the right of re-entry or forfeiture accrues is inserted in the lease in pursuance of the directions of a statute. R.S.O. 1990, c. L.7, s. 20 (2).

(4) Where the proceeding is brought to enforce a right of re-entry or forfeiture for non-payment of rent and the lessee, at any time before judgment, pays into court all the rent in arrear and the costs of the proceeding, the proceeding is forever stayed. R.S.O. 1990, c. L.7, s. 20 (4).

22 Where a lessor has commenced an action to enforce a right of re-entry or forfeiture under a covenant, proviso or stipulation in a lease, every person claiming any right, title or interest in the demised premises under the lease, if it is known to the lessor that the person claims such right or interest or if the instrument under which the person claims is registered in the proper land registry office, shall be made a party to the action. R.S.O. 1990, c. L.7, s. 22.

PART IV

79 In this Part,

“non-enforcement period” means the period that begins on the day subsection 2 (1) of the Protecting Small Business Act, 2020 comes into force and ends on the day this section is repealed. 2020, c. 10, s. 2 (1).

80 (1) Subject to subsection (2), this Part applies to a tenancy in respect of which the landlord satisfies either of the following criteria:

1. The landlord is eligible to receive assistance under the Canada Emergency Commercial Rent Assistance for small businesses program.

2. The landlord would be eligible to receive assistance under the Canada Emergency Commercial Rent Assistance for small businesses program if the landlord entered into a rent reduction agreement with the tenant containing a moratorium on eviction. 2020, c. 10, s. 2 (1).

(2) If a landlord described in subsection (1) is approved to receive assistance under the Canada Emergency Commercial Rent Assistance for small businesses program in respect of the tenancy, the following paragraphs apply:

1. Section 81 does not apply in respect of an action or application by the landlord for a writ of possession, if the action or application was commenced after the landlord was approved to receive the assistance.

2. Sections 82 and 83 do not apply in respect of an exercise of a right of re-entry by the landlord, if the right was exercised after the landlord was approved to receive the assistance.

3. Sections 84 and 85 do not apply in respect of a seizure of goods or chattels as a distress for arrears of rent by the landlord, if the seizure was done after the landlord was approved to receive the assistance. 2020, c. 10, s. 2 (1).

(3) This Part applies despite any other Part of this Act or any provision in an agreement or any common law rule. 2020, c. 10, s. 2 (1).

81 (1) Despite anything in this or any other Act, a judge shall not order a writ of possession that is effective during the non-enforcement period in respect of a tenancy described in section 80 if the basis for ordering the writ is an arrears of rent. 2020, c. 10, s. 2 (1).

(2) Subsection (1) applies in respect of an action or application that was commenced before, on or after the day subsection 2 (1) of the Protecting Small Business Act, 2020 comes into force. 2020, c. 10, s. 2 (1).

82 No landlord shall exercise a right of re-entry during the non-enforcement period. 2020, c. 10, s. 2 (1).

83 (1) If a landlord exercised a right of re-entry during the period that begins on May 1, 2020 and ends immediately before the day subsection 2 (1) of the Protecting Small Business Act, 2020 comes into force, the landlord shall, as soon as reasonably possible,

(a) restore possession of the premises to the tenant unless the tenant declines to accept possession; or

(b) if the landlord is unable to restore possession of the premises to the tenant for any reason other than the tenant declining to accept possession, compensate the tenant for all damages sustained by the tenant by reason of the inability to restore possession. 2020, c. 10, s. 2 (1).

(2) If a landlord restores possession of a premises to a tenant under subsection (1), the tenancy is deemed to be reinstated on the same terms and conditions unless the landlord and the tenant agree otherwise. 2020, c. 10, s. 2 (1).

84 No landlord shall, during the non-enforcement period, seize any goods or chattels as a distress for arrears of rent. 2020, c. 10, s. 2 (1).

85 If, during the period that begins on May 1, 2020 and ends immediately before the day subsection 2 (1) of the Protecting Small Business Act, 2020 comes into force, a landlord seized any goods or chattels as a distress for arrears of rent, the landlord shall, as soon as reasonably possible, return to the tenant all of the seized goods and chattels that are unsold as of the day subsection 2 (1) of the Protecting Small Business Act, 2020 comes into force. 2020, c. 10, s. 2 (1).

86 (1) A landlord who contravenes section 82 or 84 or who fails to comply with clause 83 (1) (a) or section 85 is liable to the person aggrieved for any damages sustained by the person aggrieved as a result of the contravention or non-compliance. 2020, c. 10, s. 2 (1).

(2) For greater certainty, subsection (1) applies in addition to any other remedy available by law to the person aggrieved. 2020, c. 10, s. 2 (1).

Re Rexdale Investments Ltd. and Gibson, 1966 CanLII 218 (ON CA)

[...]

The thrust of the landlord's submission resides in reliance on the opening words of s. 19(1), "Where a lessor is proceeding by action or otherwise to enforce a right of re-entry ... for non-payment of rent. ..." I accept argument that although the word "entry" is expressly set out in s. 18(2) but is not found in s. 19(1), none the less the words "or otherwise" in s. 19(1) embrace physical re-entry by way of self-help. On this view, it is urged upon the Court that once such re-entry has been effected (as I hold it has been in the present case), the landlord is no longer "proceeding to enforce [his] right of re- entry". He has proceeded; and the tenant has lost his right to claim relief. It follows from this assertion that in the case of physical re-entry by way of self-help, a tenant wishing to claim relief must intercept the landlord or his bailiffs in the act of re-entry by lodging his claim in the Courts before the re-entry is completed. Apparently the tenant would not be entitled to take proceedings in anticipation of physical re- entry, at least where the landlord has made no move in that direction. The issue of relief, as the landlord would have it, must hence depend on the landlord's stealth and the tenant's alterness and swiftness. This is not a savoury representation of law in action; but if this is the necessary conclusion under the relevant legislation the Court must so declare. In situations similar to the one at bar, a determination that the tenant was too late was made in at least two cases: see Ramsay v. Hildred, 1930 CanLII 104 (SK CA), [1930] 4 D.L.R. 494, [1930] 2 W.W.R. 692, 25 I.L.R. 1, and Re Davis and Garnatz, [1955] O.W.N. 690, which followed the Ramsay case. In Falkowski v. Wilson, 1965 CanLII 340 (ON SC), [1965] 2 O.R. 26, 49 D.L.R. (2d) 490, Donnelly, J., came to an opposite conclusion by purporting to distinguish the Saskatchewan legislation involved in the Ramsay case from the Ontario legislation considered by Stewart, J., in Re Davis and Garnatz. With the greatest respect, I do not think that the difference to which he pointed would alone support his refusal to follow the earlier cases. I agree, however, with the result that he reached but on different grounds which I shall now elaborate.

[...]

In summary, prior to the Ontario Act of 1911, both English and Ontario legislation provided a general procedure for re- entry or forfeiture and relief therefrom in the case of all breaches of covenants or conditions (with certain exceptions), which was inapplicable to non-payment of rent. Under that procedure, notice of the breach giving rise to the power of termination (along with some other particulars) had to be given as a prerequisite to the exercise of the power, and the tenant was hence in a position to forestall forfeiture by complying with the demand in the notice for compensation and other amends. Alongside this procedure was a particular procedure respecting re-entry or forfeiture and relief therefrom in the case of non-payment of rent. Moreover, although this special procedure was built around an action of ejectment (which could be brought "without any previous formal demand or re-entry"), it was held that relief could be given to a tenant even after the landlord had re-entered by way of self-help: see Howard v. Fanshawe, [1895] 2 Ch. 581. Stirling, J., in that case invoked by analogy the relieving equitable jurisdiction of the Court of Chancery (and see also Lovelock v. Margo, [1963] 2 Q.B. 786 at p. 788) but he held as well that the curative provisions of the Common Law Procedure Act should not be confined to cases where proceedings for ejectment were taken. I may add that what was s. 14 of the Conveyancing and Law of Property Act, 1881, is now found in s. 146 of the Law of Property Act, 1925 (U.K.), c. 20, and the separate jurisdiction to grant relief from forfeiture for non-payment of rent has been continued in s. 46 of the Supreme Court of Judicature (Consolidation) Act, 1925 (U.K.), c. 49. It remains to consider whether the shedding in Ontario in 1911 of the special procedure above referred to, and the enlargement of the general procedure to apply to non-payment of rent without any requirement of notice or demand prior to physical re-entry, must be taken to have the result contended for by the landlord. It puts a tenant who defaults in payment of rent (to the extent prescribed by the present s. 17(1) at the mercy, without legal redemption, of a surreptitious self- helping re-entry by the landlord, in a contrast to a tenant who defaults, say, in due observance of a repairing covenant, and it strips him of a protection which he had enjoyed prior to 1911.

I cannot agree with such a result for two reasons. First, I am unaware of any policy or consideration which would support such a purpose in the revision of Ontario's landlord and tenant legislation in 1911. Second, the result contended for depends on a detached grammatical reading of the phrase "is proceeding" in s. 19(1), which makes nonsense of the phrase "or otherwise" (as covering physical re-entry) by making ineffective, in any practical sense, the provision for relief from forfeiture applicable to such re-entry. We do not construe statutes, especially when they are remedial as is s. 19(1), to the point of self-contradiction. In my opinion, the phrase "is proceeding" is more properly read in the sense of "has proceeded", and I am fortified in this view by the fact that the exercise of the power of termination is manifested effectively by the mere taking of proceedings as well as by physical re-entry. What s. 19(1) means, therefore, is that when the landlord has terminated the lease by action or by actual re-entry without action, the tenant may seek relief from forfeiture in the pending action, if any, or, if none, by proceedings initiated by him. In the latter case, one would expect prompt reaction by the tenant. I need not dwell on this phase of the matter here because the tenant brought his application the day following the re-entry herein and after tendering a certified cheque for the arrears of rent on the very day of the re-entry.

Re Industrial Propane Inc. and Cooper, 1984 CanLII 1959 (ON SC)

The evidence satisfies me that the tenant is in financial straits of considerable magnitude. It owes much money to its suppliers of propane. Its solvency is doubtful. There is some evidence of breach by the tenant of para. (f) of the lessee's covenants in the lease. Paragraph (f) reads, in part: "That, if ... Lessee shall become ... insolvent or without the consent of the Lessor make a sale, under the Bulk Sales Act ... the said term shall immediately become forfeited and void ...". Paragraph (f) of the lessee's covenants has to do with assuring the landlord in his expectation of a continuing flow of rent.

Now, it is the tenant's breach of para. (f) of the lessee's covenants that forms the basis of the purported re-entry and forfeiture of the lease by the landlord. The notice of forfeiture of the lease, is in the form of a letter dated July 9, 1984, from the solicitor for the landlord to the tenant. After a recitation of para. (f) of the lessee's covenants, the material words of that letter read:

By reason of the recent events involving the Bulk Sales of some of your assets, the offer to sell equipment to Elgin Petroleum and your obvious insolvency as documented by Price- Waterhouse and the actions of your various creditors, your abovenoted lease is forfeited and void.

Now, the threshold issue is whether or not the notice complies with the requirements of the Landlord and Tenant Act. Section 19(2) of the Act is as follows:

19(2) A right of re-entry of forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease, other than a proviso in respect of the payment of rent, is not enforceable by action, entry, or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money to the satisfaction of the lessor for the breach.

[...]

Now, I agree with the observations of my brother R. E. Holland J. in Ellis v. Breslin (1974), 1974 CanLII 461 (ON SC), 2 O.R. (2d) 532, as reflected in the headnote to that case:

Section 19(2) of the Landlord and Tenant Act, R.S.O. 1970, c. 236, requires a landlord, before exercising a right of re- entry or forfeiture arising from a stipulation in a lease, to serve on the tenant "a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach". In order for a notice to comply with s. 19(2) of the Act the notice must not only specify the breach complained of but also require the tenant to remedy the breach and by its terms permit the tenant a reasonable time to carry out this remedial action. Accordingly, where the landlord sends a notice to a tenant simply pointing out that the tenant is in default under a certain covenant in the lease and requiring the tenant to vacate the premises on a stated date, the notice cannot be said to be in conformity with s. 19(2) and the landlord is not entitled to re-enter until that section has been complied with.

The breach of para. (f) of the lessee's covenants complained of, is obviously the state of the tenant's insolvency or apprehended insolvency and the making of a bulk sale of assets. Perhaps there is a lack of particularity in the identification of the breach in the letter of July 9, 1984, in the light of the words "specifying the particular breach etc.", as found in s. 19(2). For the sake of discussion, and for the purposes of these reasons, however, I will assume that the letter does give enough particulars of the breach. But, and most significantly, the letter fails to require the lessee to remedy the breach. The letter therefore fails to constitute a proper notice of re- entry or forfeiture of the lease, if the breach is capable of remedy. If the notice is defective because it fails to require the tenant to remedy the breach (assuming the breach is capable of remedy) then the re-entry or forfeiture of the lease is unlawful as not conforming to s. 19(2).

[...]

I am of the view that the statutory remedy in s. 20(1) is broad and flexible. The section provides, that on the tenant's application for relief, the court may grant such relief "as, having regard to the proceedings and conduct of the parties under section 19 and to all the other circumstances, the court thinks fit". It is my view having regard to the fact that there was an interim injunction granted to the tenant to restrain the landlord from re-entry by my sister Boland J. which expired only in late July, and the fact that after that injunction expired, the landlord re-entered, and that the repossession of the property by the landlord has subsisted only from the end of July until now, which is perhaps six weeks, that certainly the balance of convenience favours my granting at least an interim remedy to the tenant. The balance of convenience concept, which is of course a concept utilized by the court in considering whether to grant an injunction, is a helpful concept to have in mind, when the court considers what relief is "fit", under s. 20(1).

COVID–19: CECRA for small businesses

ELIGIBILITY

To qualify for CECRA for small businesses, the commercial property owner must:

• Own commercial real property which is occupied by one or more impacted small business tenants
• Enter (or have already entered) into a legally binding rent reduction agreement for the period of April, May and June 2020, reducing an impacted small business tenant’s rent by at least 75%
• Ensure the rent reduction agreement with each impacted tenant includes:
  • a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds, and
  • a declaration of rental revenue included in the attestation
  • The commercial property owner is not holding federal or provincial political office controlled by an individual holding federal or provincial political office CECRA will not apply to any federal, provincial, or municipal-owned properties, where the government is the landlord of the small business tenant.

Exceptions Where there is a long-term lease to a First Nation, or Indigenous organization or government, the First Nation or Indigenous organization or government is eligible for CECRA for small businesses as a property owner.

Where there are long-term commercial leases with third parties to operate the property (for example, airports), the third party is eligible as the property owner.

Also eligible are post-secondary institutions, hospitals, and pension funds, as well as crown corporations with limited appropriations designated as eligible under CECRA for small businesses.

NOTE: Small businesses that opened on or after March 1, 2020 are not eligible. Properties with or without a mortgage are eligible under CECRA for small businesses.

Defining commercial real property

We define commercial real property as a commercial property with small business tenants.

Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenant.

Impacted small business tenant? Impacted small business tenants are businesses — including non-profit and charitable organizations — that:

• pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement)
• generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level)
• have experienced at least a 70% decline in pre-COVID-19 revenues (at the entity level)

NOTE: Eligible small business tenants who are in sub-tenancy arrangements are also eligible, if these lease structures meet program criteria.

Calculating the 70% reduction in revenues There are 2 scenarios by which to calculate your 70% reduction in revenues:

• If your small business was operating during April – June 2019, then compare your gross revenues from April, May and June of 2020 to your revenues of April, May and June of 2019.
• If your small business was not operating during April – June 2019, then compare your average gross revenues from April, May and June of 2020 to your average gross revenues for January and February 2020.

NOTE: Your revenue must consist of revenue earned from ordinary activities in Canada. Calculate your revenue using your normal accounting method and exclude revenues from non-recurring items.

For registered charities and non-profit organizations, the calculation would include most forms of revenue, excluding revenues from non-arm’s length persons.

Your June forecast must be supportable by the variables at play for your business. The result is to be guided by the average revenue reduction for April and May and the forecasted change given your respective province or territory’s guiding principles for reopening the economy (i.e. where the impacted business falls in the staged approach).

The Second Cup Ltd. v. 2410077 Ontario Ltd., 2020 ONSC 3684 (CanLII)

[56] In light of my finding that the Lease was not lawfully terminated by the landlord, there is no need to grant relief from forfeiture to Second Cup. However, even if the Lease had been lawfully terminated, I would have granted Second Cup relief from forfeiture. The court has the discretion to do so under s. 98 of the Courts of Justice Act, R.S.O. 1990 c. c.43 and s. 20 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7

[57] The equities of this case would favour granting relief from forfeiture. In Jungle Lion Management Inc. v. London Life Insurance Company, 2019 ONSC 780, at para. 34, this court considered the following three criteria:

(a) the conduct of the applicant and gravity of the breaches;

(b) whether the object of the right of forfeiture in the lease was essentially to secure the payment of money; and

(c) the disparity or disproportion between the value of the property forfeited and the damage caused by the breach.

[59] The landlord defendants argue that when a party seeks to be relieved from forfeiture based on a non-payment of rent the court should consider criteria from Michele’s Italian Ristorante Inc. v. 1272259 Ontario Ltd., 2016 ONSC 4888, at paras. 35-36. In that decision, the court set out criteria for relief from forfeiture generally at para. 35, and separate, more specific criteria at para. 36, where the alleged default is based upon the non-payment of rent:

a. the tenant comes to court with clean hands;

b. whether there is an outright refusal to pay rent;

c. the extent of the rental arrears; and

d. whether the landlord has suffered serious loss due to the delay in paying rent.

See also: 2324702 Ontario Inc. v. 1305 Dundas, 2019 ONSC 1885, aff’d 2020 ONCA 353

[60] I have considered these additional factors, and they all favour the plaintiffs.

a. The fact that there was one prior dispute in 2015 about the payment of rent that led to an amendment to the Lease does not suggest a pattern of default or lack of clean hands. The rental arrears were not significant as of the beginning of May, especially when considered in light of what was happening in the world as a result of the COVID-19 pandemic.

b. Nor was the March 25 letter from Second Cup indicating that it and its franchisees would not be able to pay April rent on the first of the month an outright refusal to pay rent as the landlord defendants suggest. It was a reasonable and transparent communication to landlords by a responsible corporate tenant of numerous premises across the country.

c. Further, the landlord defendants claim that they have significant mortgage carrying costs but have not put in any evidence about actual prejudice that they have suffered as a result of not having been paid the balance of April’s rent and May’s rent under the Lease.

[63] While the landlord’s motivation may not be relevant (see 149777 Ontario Inc. v. Leon’s Furniture Ltd. (2003), 2003 CanLII 50106 (ON CA), 67 O.R. (3d) 206 (C. A.), at para. 74), its conduct may be relevant in the exercise of the court’s equitable jurisdiction to grant relief from forfeiture. The sequence of events indicates that the landlord entered into arrangements with 143 and BOD that disregarded the plaintiffs’ rights in respect of the premises, including that:

a. On May 4, 2020, after Second Cup had offered to bring the Lease into good standing, the landlord instead immediately after receiving that offer signed a lease for the premises with BOD that granted a significant rent-free period.

b. On May 6, 2020, knowing that 273 had an RSA application pending for a cannabis store at the premises and that the plaintiffs were disputing the termination of the Lease, the landlord nonetheless wrote directly to the AGCO to advise of its termination of the Lease. Since there cannot be two licences for the same premises, this would have paved the way for an RSA application by 143 for adjacent premises in the Building Envelope under the 143 Lease that the landlord then proceeded to finalize on May 7, 2020.

c. The landlord had conditionally agreed to the 143 Lease on April 7, only 5 weeks after granting Second Cup exclusive cannabis retail rights at the Building Envelope (and accepting $33,9000 in exchange for said rights). This conditional 143 Lease contemplated cannabis exclusivity being granted to another tenant in the Building Envelope only 4 days after the April 3 notice, when the landlord was in receipt of 75% of April’s rent and days after the province-wide business shutdown due to the COVID-19 pandemic.

2324702 Ontario Inc. v. 1305 Dundas W Inc., 2020 ONCA 353 (CanLII)

[22] The Commercial Tenancies Act, R.S.O. 1990, c. L.7, allows the court to grant “such relief as […] the court thinks fit”, having regard to all the circumstances, where a landlord seeks to enforce a right of re-entry or forfeiture following a tenant’s breach: ss. 19, 20(1). The Saskatchewan River Bungalows case also established the test for granting relief from forfeiture. In granting the discretionary and equitable remedy of a relief from forfeiture, a court is to consider the conduct of the applicant, the gravity of the applicant’s breaches of the lease, and the disparity between the value of the forfeited property and the damage caused by the breach: Saskatchewan River Bungalows, at p. 504.

[23] Although the failure to renew the lease is not a breach of the lease, the court may grant relief from forfeiture where a party seeks to renew the lease but has not complied with the formal requirements or preconditions for doing so. However, this relief is available only in circumstances more narrowly confined than the three-pronged test from Saskatchewan River Bungalows. As recently restated in McRae Cold Storage Inc. v. Nova Cold Logistics ULC, 2019 ONCA 452, at para. 10:

With respect to the renewal of a lease, a precondition for the exercise of any such equitable discretion is that the tenant has made diligent efforts to comply with the terms of the lease which are unavailing through no default of his or her own: 120 Adelaide Leaseholds Inc., at para. 9; Ross v. T. Eaton Co. (1992), 1992 CanLII 7470 (ON CA), 11 O.R. (3d) 115 (C.A.), at pp. 124-125; 1383421 Ontario Inc. v. Ole Miss Place Inc. (2003), 2003 CanLII 57436 (ON CA), 67 O.R. (3d) 161 (C.A.), at para. 80; Mapleview-Veterans Drive Investments Inc. v. Papa Kerollus VI Inc., 2016 ONCA 93, 344 O.A.C. 363, at paras. 55-56.

[24] The application judge found that equitable relief was not warranted here because of the appellant’s conduct. First, the appellant had not made diligent efforts to comply with the renewal term, but instead hedged its bets by seeking to negotiate without committing to renew. Second, the appellant’s failure to pay its rent on time, including one time when it delivered an NSF cheque, was not the type of reasonable conduct that a court looks for as the basis to grant equitable relief. Although the appellant has a large investment in the premises which it stands to lose, this consequence is effectively a result of its own decisions regarding its conduct in relation to the respondent.

[25] The appellant argues that in assessing its conduct, the application judge misapprehended the evidence by stating that the appellant had experience in exercising a renewal option for the premises. In fact, the appellant says, it had not previously exercised a renewal option but rather, entered into a lease amending agreement. We reject this argument. The application judge’s point was that the appellant had a level of sophistication in dealing with the lease of the premises, which was partly based on its prior dealings with the respondent’s predecessor in negotiating and concluding the lease amending agreement. That experience spoke against any misunderstanding of the renewal requirements.

Campbell v. 1493951 Ontario Inc., 2020 ONSC 2942 (CanLII)

[2] The court is receiving numerous applications for relief from forfeiture of commercial tenancies during the current pandemic crisis. It is not always clear in such cases that the tenant is suffering from the effects of the pandemic or whether the tenant actually cannot pay its rent or, by contrast, whether a landlord may be using a tenant’s financial predicament as a convenient basis to remove an otherwise pesky tenant. There is always a factual story which drive the equities or the justice of the case.

[4] In virtually all of these cases that have been dealt with during this crisis, at the first case conference the parties have agreed upon interim terms to allow the tenant to resume occupation of the premises pending determination of the issues between the parties at a more opportune time.

[5] The court has been calling for extraordinary cooperation among counsel and parties alike since the release of the Notice to the Profession on March 15 2020. Nowhere is this more important than in the commercial landlord and tenant sphere. The stakes are extremely high for all. Tenants have been deprived of their revenue but, by not receiving rent, so too have landlords. Would that there were other paying tenants lined up to pay the landlord for its space. Absent regular market forces, it is difficult to understand how the landlord is harmed if it accrues the tenant’s rent obligation as a legal entitlement rather than having an empty unit. However, each case has its own facts.

Low Risk Logistics Inc. v. Mantella & Sons Investments Limited, 2020 ONSC 3936 (CanLII)

[3] I am now charged with the task of determining the entitlement to costs that were incurred as a result of this application.

[4] For the reasons that follow, I find that the Applicant is entitled to its costs on a partial indemnity basis, which I have fixed below.

[5] Low Risk Logistics Inc. (“Tenant” or “Low Risk”) has been a tenant of Mantella & Sons Investments and Horner Developments (“Landlord”) for the past 15 years. The most recent Lease renewal between the Tenant and the Landlord started in September 2019 (“Lease”), and concluded in December 2019, resulting in an extension for another five years. Under the terms of the Lease, Low Risk must pay $94,064.94 in base rent.

[17] The general principles applicable to this case are settled and agreed upon by the parties. Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, and Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, govern this matter and afford this Court with a wide discretion when awarding costs.

[18] In my opinion, the costs clause in the Lease cannot and should not be permitted to oust the Court’s jurisdiction and discretion in respect of costs.

[19] While the Court will generally exercise its discretion so as to reflect a contractual right to costs, it is open to the Court to exercise its inherent discretion contrary where there is “good reason for so doing”.[1] This includes the presence of inequitable conduct or special circumstances that would make the imposition of these costs unfair or unduly onerous.[2] Hence, the Landlord’s contractual right to substantial indemnity costs found in s. 7.1(d) of the Lease is not determinative of the issue.

[20] Based on the conduct of the parties and the unique circumstances surrounding the events in question, I am not inclined to exercise my discretion to enforce s. 7.1(d).

[21] In my view, the Landlord acted precipitously in trying to lock out and evict the Tenant when it asked for an accommodation because of a temporary financial strain precipitated by a global pandemic.

Falkowski v. Wilson, 1965 CanLII 340 (ON SC)

Section 20 of the Landlord and Tenant Act reads in part:

20. Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture under any covenant, proviso or stipulation in a lease, the court, on application by any person claiming as under-lessee any estate or interest in the property comprised in the lease or any part thereof, either in the lessor's action, if any, or in any action summary application to a judge of the Supreme Court brought by such person for that purpose, may make an order ...

The reasoning with reference to s. 19(1) applies equally to this section.

The purpose of s. 19(1) is to enable a lessee to obtain relief against forfeiture where the circumstances warrant. By leaving the words in question in the section, after the enactment of s. 18(1)(a), the Legislature must be deemed to have intended that they be given effect to and acted upon. The section must receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act. The words are superfluous and meaningless unless they are interpreted so as to permit an application for relief by a lessee after a lessor has made physical re-entry without process of law. It must follow that such a re-entry does not deprive the lessee of his right to apply for relief.

In view of the negotiations between the parties, a few days before December 17th, with reference to a longer lease covering more land and a building or buildings which the lessee proposed to place upon the land, the tender of the rent by the lessee before any notice was served on him, and the fact that the lessee had paid three-quarters of the rent for the year but had been in possession only from June 15th to December 18th when the gate was padlocked, there will be an order granting him relief against forfeiture of the lease in question upon payment to the lessor of the rent which is past due with interest at 5% from the due date until payment, such payment to be made within 10 days of this date.

859587 Ontario Ltd. v. Starmark Property Management Ltd., 1997 CanLII 12153 (ON SC)

Termination, forfeiture or surrender

It is trite law that a landlord must elect between the remedies of termination and distress. He cannot exercise both. Atlantic relies on the landlord's changing of the locks, and its efforts to re-let the premises as proof that it acted in a manner inconsistent with the continued existence of the lease.

It is true that where a landlord locks the premises and excludes the tenant, the courts generally consider this to be an act of forfeiture, disentitling the landlord to the remedy of distress: see, for example, Clarkson Co. v. Consortium Group Ltd. (1983), 1983 CanLII 1995 (ON SC), 40 O.R. (2d) 771, 45 C.B.R. (N.S.) 273 (H.C.J.), and the cases discussed therein. But here, the evidence is that the tenant was not excluded, having regard to the face of the warrant and the bailiff's subsequent acts, and that the locks were changed to protect the property, and the right of distress, the goods being too bulky to remove. In addition, removal of the booth would have necessitated repairs to the premises. The cases have recognized that in some circumstances, changing the locks may reflect an impounding of the goods distrained, and not forfeiture. In Lussier v. Denison, 1971 CanLII 737 (ON SC), [1972] 3 O.R. 652 at p. 655, 29 D.L.R. (3d) 160 (Co. Ct.), affirmed without reasons 1972 CanLII 378 (ON SC), [1972] 3 O.R. 656n, 29 D.L.R. (3d) 164n (C.A.), P.J. Macdonald Co. Ct. J. stated:

It is argued for the landlord that in this case there was an impounding of the premises which amounted to a distress and not a forfeiture and that while usually a landlord would remove the distrained articles from the premises, it would be difficult and impractical in this situation to remove the machinery which was of a heavy type and that off-premises storage would be expensive. There is no evidence before me that would suggest that taking of the goods from the premises would be impractical.