The second instalment of this miniseries addresses a landlord's options in the event that a tenant breaches a commercial lease. The seminal case on this topic continues to be Highway Properties Ltd. v. Kelly, Douglas and Co. Ltd. (1971 SCR 562), in which the Supreme Court of Canada outlined the three historic remedies available to landlords, and introduced a fourth. In summary, in the face of a tenant's breach of a commercial lease, a landlord may:
- Refuse to accept the tenant's repudiation and insist on performance of the lease, i.e., elect to sue the tenant for rent or damages while the lease continues to remain in force;
- Accept the tenant's repudiation of the lease and terminate the lease, retaining the right to sue for rent due until such termination, or for damages accrued up to the date of termination for previous breaches;
- Give clear notice to the tenant that the landlord wishes to re-let the premises on the tenant's account and re-possess the property on that basis, and sue for shortfall in rent where it occurs; or
- Terminate the lease on notice and re-possess the property while reserving the right to sue for prospective damages for the unexpired term of the lease (including unpaid future rent).
Which option is best suited for a particular landlord will depend on the facts of each case.
Missed the earlier instalment of this miniseries? Read the previous bulletin, Commercial Leasing & Landlord Remedies: Verbal Agreements/Offers to Lease.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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