Frustration of Contract (LTB)

CET-55930-16-RV (Re), 2016 CanLII 88098 (ON LTB)

2. Section 19 of the Residential Tenancies Act, 2016 (the 'Act') states that the doctrine of frustration and the Frustrated Contracts Act apply to tenancy agreements.

3. The doctrine of frustration (or impossibility of performance as it is also sometimes referred to) requires that a number of conditions be met before the doctrine will apply as identified in the Dictionary of Canadian Law, 3rd edition, D. D, pages 513-514.

4. First, an unexpected event that was not contemplated in the contract or foreseeable must occur.

5. Second, the unexpected event cannot be self-induced or the fault of one of the parties. A frequently quoted case on frustration states that the event cannot be the fault of either party (National Carriers Ltd. V. P (Northern) Ltd. [1981]1 A11 E.R. 161 (H.L.).

6. If it were otherwise, a party could undertake a destructive act (such as destroying a rental unit by fire or flood) in order to get themselves out of their obligations under a contract. This would be a self-induced frustration and an unjust result would occur if a party could rely on their own negligent acts or fault to get themselves out of an otherwise binding contract.

7. Third, the event must drastically change the nature of the contract so that it is impossible (not just difficult or expensive) to perform the obligations under the contract. The impossibility of performance must be of a long term nature and not temporary or transient.

8. The court in Re S and J et al., 1984 CanLII 2014 (ONSC) quoted the case of Lord S S.S. Co. Ltd. v. D C Co., Ltd., 1925 CanLII 330 (UK JCPC), (1926) 1 D.L.R. 873, (1926) A.C. 108 at p. 114, (1926) 1 W.W.R. 273, which held that:

... frustration can only be pleaded when the events and facts on which it is founded have destroyed the subject matter of the contract, or have, by an interruption of performance thereunder so critical or protracted as to bring to an end in a full and fair sense the contract as a whole, so superseded it that it can be truly affirmed that no resumption is reasonably possible.

9. All the conditions must be met for the doctrine of frustration to apply. If it is determined that one condition does not apply, it is not necessary to do a further analysis of whether the other conditions were met.

TSL-79813-16 (Re), 2017 CanLII 28616 (ON LTB)

13. Section 19 of the Act speaks to the issue of frustration of contracts. It reads as follows:

19. The doctrine of frustration of contract and the Frustrated Contracts Act apply with respect to tenancy agreements. 2006, c. 17, s. 19.

14. Frustration of contract means that a contract can be brought to an end because of some factor that makes it impossible for a party, or both parties to comply with its fundamental terms. The party that argues that the contract should be put to an end must establish that it is impossible to perform the contract.

15. The facts in this case do not establish that on a balance of probabilities the Landlord is unable to perform the contract. Rather, what is evident is that the tenancy could continue once the Landlord has repaired the residential complex. The Tenant’s unit is intact; there is no dispute that the Tenant’s unit is not damaged. The issue is that the Landlord needs to repair the remainder of the residential complex, and her presence in the unit impedes his ability to do so.