Senior associate Jon Silver welcomed the Ontario Court of Appeal’s decision in Canada Life Assurance Company v. Aphria Inc., 2024 ONCA 882, which affirmed that landlords do not have a duty to mitigate damages when commercial leases repudiate, he said in an interview with Law360 Canada.
Torys acted as counsel for the Real Property Association of Canada (RPAC), which was granted intervenor status in the case. The Torys team consisted of Jeremy Opolsky, David Bish and Jon Silver.
“RPAC argued, and the Court agreed, that the principles of stare decisis, including certainty and stability, would be undermined by the change in the law advocated by the tenant, Aphria,” Jon told Law360.
In 2018, Aphira Inc. signed a 10-year lease in a downtown Toronto commercial building, which was later bought in 2019 by Canada Life Assurance Company, among other companies. Aphira served a notice of repudiation in 2021; however, Canada Life asserted that it did not accept—and was under no obligation to accept—the tenant’s repudiation of the lease.
Aphira later informed Canada Life that it had vacated the office space and that Canada Life, as the landlord, had a duty to mitigate its damages. The landlord disagreed and treated the lease as binding, later suing Aphira for rent owing since January 2022 of $638,171.40 plus interest.
In its decision, the Court referenced Highway Properties Ltd. v. Kelly, Douglas & Co., [1971] S.C.R. 562, in which the Supreme Court “held that a landlord who, faced with a fundamental breach by the tenant, chooses to do nothing to alter the landlord-tenant relationship and insists on performance of the terms of the lease may sue for rent or damages on the basis that the lease remains in force.”
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