Relief from Forfeiture: 8750297 Canada Inc. v. Ambassador Realty Inc.

This article was originally published on Law360TM Canada (www.law360.ca), part of LexisNexis Canada Inc.

The Superior Court of Justice Ontario granted relief from forfeiture to the applicant who brought an application pursuant to Section 20(1) of the Commercial Tenancies Act (CLA) R.S.O. 1990, c. L.7 (CTA), and section 98 of the Courts of Justice Act (CJA) R.S.O. 1990, C.43 (CJA). Section 20(1) of CLA provides relief from forfeiture “having regard to the proceeding and conduct of the parties under section 19 and to all other circumstances.” Section 98 of the CJA grants the court jurisdiction to grant relief from forfeiture as the court considers just.

In this case, 8750297 Canada Inc. v. Ambassador Realty Inc. 2025 ONSC 5479, the applicant(tenant)had missed the renewal deadline and did not provide a written notice to the respondent (landlord) to renew the commercial lease. As a result, the respondent terminated the lease and signed a new lease with a new tenant. Until the determination of the application, the court granted interlocutary injunction restraining the respondent from taking any steps to terminate the lease, locking the applicant out of the premises and allowing the new tenant to take over the premises.

Looking at the facts of the case, the applicant has been on the leased premises since November 2012 and for 12 years running a pizza store. The lease expired on August 31, 2025. It provided for eight months of written notice for renewal. The applicant had to provide written notice to exercise its option to renew the lease on or before December 31, 2024. The applicant missed this deadline. As a result, the respondent terminated the lease and entered into a new lease with someone else. The applicant tried to communicate with the respondent for renewal but was told that they would require vacant possession at the end of August 2025. Hence this application where the applicant is seeking relief from forfeiture for his failure to provide the required written notice under the lease and that the equities are in his favour.

The legal framework on commercial lease is very clear that an option to renew a commercial lease is a contractual right and requires strict compliance with its terms. Missing a deadline to renew a commercial lease means that the option to renew is lost. However, equitable relief from forfeiture may save the tenant who has missed the deadline. The issue before the court is to consider whether this breach was inadvertent, the applicant tenant acted promptly once he became aware that he missed the deadline and whether the landlord is not unfairly prejudiced.

In deciding this case, the court analysed many cases on the subject matter and provided appropriate reasoning. A precondition for the exercise of equitable discretion is that the applicant made diligent efforts to comply with the terms of the lease and that equities favour the applicant. The court finds that the applicant:

1. Showed due diligence and acted in good faith.
2. Verbalised intention to renew to the property manager.
3. Failue to comply with the deadline was due to illness and inadvertant (medical evidence presented).
4. Assumed that he would receive a reminder from the respondent as it had been in the past practice on two occasions in 2011 and 2016. To be clear, the respondent was not under an obligation to remind the applicant nor was its silence an indication of a waiver of the term of the lease.
5. He immediately advised the respondent with his intention to renew once he learnt about the missed deadline. On February 5, 2025, when he was advised by the respondent of the missed deadline, he wrote to him the same day indicating his intention to renew and asked them to send him a reminder in the future and to provide the lease for his signature.
6.  The relief sought by the applicant would not unjustly enrich the respondent. The respondent benefits from the improvement worth $100,000.00 done by the applicant without any compensation to the applicant. The respondent offered the applicant to pick up his fixtures from the premises provided that the applicant will repair any damage caused by the removal.
7. There is no evidence of default by the applicant.
8. The applicant also made efforts to mitigate his losses and rented another space and had significant start up costs.

The court finds that the applicant comes with clean hands and was not trying to “hedge its bets”. The court issues a declaration that the lease is renewed despite the technical non-compliance with the notice provisions, and the applicant was restored to his contractual right of renewal for the remainder of the term of five years and on the conditions set out in the lease.

Takeaway from this case:

1. Renewal options under commercial lease must be taken seriously and treated with strict compliance by all the parties to the lease.
2. Relief from forfeiture is a discretionary remedy only and cannot be applied to every case of missed deadline.

Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.