Law360 Canada (May 12, 2026, 9:18 AM EDT) --
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| Balvinder Kumar |
The Ontario Superior Court of Justice granted relief from forfeiture to an applicant who brought an application pursuant to s. 20(1) of the
Commercial Tenancies Act, R.S.O. 1990, c. L.7 (CTA), and s. 98 of the
Courts of Justice Act,
R.S.O. 1990, c. C.43 (CJA). Section 20(1) of the CTA provides relief from forfeiture “having regard to the proceeding and conduct of the parties under section 19 and to all the 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 an interlocutory 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.
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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 Aug. 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 Dec. 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 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 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 analyzed 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 found that the applicant:
1. Showed due diligence and acted in good faith.
2. Verbalized intention to renew to the property manager.
3. Failure to comply with the deadline was due to illness and inadvertent (medical evidence presented).
4. Assumed he would receive a reminder from the respondent as it had been 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 of his intention to renew once he learned about the missed deadline. On Feb. 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 done by the applicant without any compensation to the applicant. The respondent offered to pick up the applicant’s fixtures from the premises provided that the applicant 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 found that the applicant came with clean hands and was not trying to “hedge his bets.” The court issued a declaration that the lease was 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.
Takeaways from this case:
1. Renewal options under commercial leases must be taken seriously and treated with strict compliance by all parties to the lease.
2. Relief from forfeiture is a discretionary remedy only and cannot be applied to every case of missed deadline.
Balvinder Kumar practises real estate law (residential and commercial) and is a freelance writer and author with LexisNexis.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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