Commercial Lease Remedies: You Only Get What You Drafted
When a tenant stops paying rent, commercial landlords naturally look to the remedies clause in their lease. Often, that clause includes general language such as "in addition to any other remedies available to Landlord at law or in equity," which may appear to preserve every possible remedy. It does not. The remedies available on a tenant default are only as broad as what is actually specified in the lease, and a landlord who assumes otherwise could jeopardize their chances of recovery.
The Ontario Court of Appeal's recent decision in Highbury Narrows Ltd. v. LAF Canada Company, 2026 ONCA 194 ("Highbury") provides a recent example of how lease wording can limit recovery following tenant default.
Under the terms of the lease in Highbury, the landlord was required to choose between terminating the lease or keeping it in force and continuing to collect rent. After electing to terminate the lease for unpaid rent, the landlord claimed over $1,000,000 in damages, including future rent over the remaining term of the lease. At summary judgment, the landlord only recovered just over $140,000, an amount the tenant had already conceded, and was ordered to pay the tenant's costs at both the motion and at the appeal. Here’s what commercial landlords need to know.
Broad Language, Narrow Rights
As in Highbury, many commercial leases require a landlord to choose between terminating the lease or keeping it in force and continuing to collect rent. Generally, the right to collect ongoing rent is tied only to the non-termination option, a landlord who terminates cannot later claim the future rent it gave up by doing so. Related issues concerning a landlord’s obligations following termination, including whether landlords must mitigate their losses, are currently under consideration by the Supreme Court of Canada.
Because a commercial lease is also a contract, a landlord is not limited to simply retaking possession when a tenant defaults. Canadian law recognizes that a landlord can, in appropriate circumstances, claim damages for future rent losses over the balance of the term. This principle originates from the Supreme Court of Canada's decision in Highway Properties Ltd. v Kelly, Douglas & Co. Ltd. (“Highway Properties”). However, Highway Properties establishes a default rule, not a guaranteed entitlement. The Supreme Court expressly noted that the lease in that case did not preclude a claim for future damages. Where a lease does restrict or exclude such recovery, as in Highbury, the principle does not apply.
In Highbury, the Court of Appeal held that the general "remedies at law or in equity" language in the lease was defeated by the express provision dealing with default. The lease permitted recovery of future rent only where the landlord chose not to terminate.
If your lease structures default remedies as a choice between termination and keeping the lease alive, and you want the right to claim future rent on termination, that right should be expressly included in the lease contract. General language will not fill the gap.
Enforce Your Rights While the Lease Exists
Contractual rights should be exercised while the lease remains in effect. Waiting until after termination, particularly where the lease does not provide for post-termination recovery, may leave a landlord without recourse.
In Highbury, the landlord sought the cost of removing a pool installed by the tenant, but the Court found the landlord had never required removal during the term of the lease and never removed it themselves. Claims for post-termination maintenance and signage were also dismissed because the lease contained no provision requiring the tenant to pay those amounts after termination.
The Bottom Line
Litigation is not a substitute for a well-drafted lease. In Highbury, the landlord pursued a damages theory the lease did not support, resulting in recovery well below what may have been achievable, along with two adverse costs awards in favour of the defaulting tenant, particularly in light of the tenant’s reasonable offer to settle.
Before pursuing a claim arising from tenant default, commercial landlords should seek experienced counsel to critically assess whether the lease language, and the remedies it provides, support the relief sought.
HOW WE CAN HELP
With extensive experience advising commercial landlords on lease drafting, default remedies, and dispute resolution, RAR Litigation's lawyers can provide strategic guidance. Whether negotiating a new lease, responding to a tenant default, or evaluating litigation options, our team can help you fully understand your rights and protect your commercial interests.
Contact us to discuss strategic advice, risk assessment, and how RAR Litigation can support your commercial leasing needs.