Successful Outcome in Commercial Lease Dispute
Overview
Background
The tenant, 2753012 Ontario Inc., signed a five-year lease in February 2020 with our client, Pylos Holdings Ltd., intending to open a restaurant. However, over nearly four years, the tenant never opened for business and consistently fell behind on rent—ultimately failing to pay rent for at least 12 months between December 2021 and January 2024.
Despite repeated promises to catch up on arrears, the tenant made just one payment in November 2023. It later argued that this payment prevented the landlord from terminating the lease. However, no rent was paid for the following two months.
On January 25, 2024, the landlord exercised its rights under the lease: it changed the locks and formally terminated the tenancy due to continued non-payment.
The tenant responded by filing a court application, seeking to overturn the termination and obtain relief from forfeiture.
Court’s Decision
The Court sided with the landlord on all key issues:
- No waiver of rights: The Court found that accepting a single rent payment did not amount to a waiver of termination rights. The lease required any waiver to be in writing and signed by the landlord, which had not occurred. There was also no clear intention by the landlord to give up its rights. Even if there had been, the tenant defaulted again shortly afterward.
- Proper termination: The tenant claimed the landlord had to provide notice before terminating. The Court disagreed, citing a lease provision that allowed for termination if rent was unpaid for 15 consecutive days—regardless of whether notice was given.
- No relief from forfeiture: The Court found that the tenant had waited too long—over five months—before taking legal action. By then, the landlord had relet the property, and the new tenant had already taken possession.
Outcome
The Court dismissed the tenant’s application in full. This case is a clear reminder of the importance of timely rent payments and the strength of well-drafted lease provisions. It also underscores the value of acting promptly when enforcing lease rights.