Self-Help - Re: Commercial Tenancy

1328773 Ontario Inc. o/a Angling Outfitters v. 2047152 Ontario Limited, 2013 ONSC 4953 (CanLII)

[10] I start with the provisions of s.19(2) of the Commercial Tenancies Act, R.S.O. 1990, c.L.7, which reads as follows:

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.

[12] First, any purported right of a commercial landlord to re-enter leased premises or treat the lease as having been forfeited obviously is predicated on the existence of a breach or breaches of the lease agreement by the tenant. In that regard:

[20] The Court of Appeal also quoted with approval from Ewart, Waiver Distributed (1917), at p.168:

A demand for the payment of rent which fell due after a breach of a stipulation is evidence of an election to continue the tenancy notwithstanding the breach; for the demand necessarily implies the continued existence of the lease (without that there could be no rent), and is inconsistent with election to terminate.

[21] In this case, when the Landlord accepted rent from Angling Outfitters after indicating its knowledge of specified defaults allegedly warranting termination of the lease, it therefore made a binding implicit election and indication that it henceforth would not be relying on the alleged defaults as a basis for termination or forfeiture of the lease, (as opposed to a possible claim for damages).

[23] In that regard, our Court of Appeal has emphasized on numerous occasions that such notice is a protection to the tenant, the purpose of which is to warn the tenant that its leasehold interest is at risk and to give the tenant an opportunity to preserve that interest by remedying the breaches underlying the landlord’s complaints. Moreover, “because courts have not looked favourably upon the remedies of re-entry, forfeiture and termination, they have insisted that landlords strictly comply with the notice requirement in s.19(2)”; see 780046 Ontario Inc. v. Columbus Medical Arts Building Inc., 1994 CanLII 1188 (ON CA), [1994] O.J. No. 2282 (C.A.), at paragraph 23, and the further authorities cited therein.

[24] The giving of the requisite statutory notice is a condition precedent to re-entry without action, and to the right to recover possession by action. In other words, the notice is not an election to exercise the right of forfeiture but is a preliminary statutory requirement for its exercise. Unless and until the landlord has provided notice in strict compliance with the requirements of the statute, the Landlord is not entitled to rights of re-entry or termination of the commercial lease agreement. Any purported re-entry and lease termination without prior satisfaction of the legislative notice requirement is invalid, such that the lease will remain in effect. See, for example, Lucas v. Cut Rate Shoe (1932), 41 O.W.N. 252 (C.A.), at paragraph 1; Stekel v. Wasylyshyn, [1948] O.W.N. 464 (C.A.), at p. 465; Mount Citadel Ltd. v. Ibar Developments Ltd., (1976), 1976 CanLII 770 (ON SC), 14 O.R. (2d) 318 (H.C.J.), at p. 329; and 780046 Ontario Inc. v. Columbus Medical Arts Building Inc., supra, at paragraphs 27-28.