In 8750297 Canada Inc. v. Ambassador Realty Inc.,[1] the Ontario Superior Court of Justice granted equitable relief from forfeiture to a commercial tenant who missed a lease renewal deadline. The case highlights the court’s ability to forgive technical non-compliance where it is equitable to do so.
The background
The applicant, 8750297 Canada Inc. (the Tenant), owned by Ahmed Yahia, operates a pizza restaurant at 1020 St. Laurent Blvd., Unit 6, a commercial space owned by the Respondent, Ambassador Realty Inc. Mr. Yahia purchased the pizza franchise in 2012 for CA$125,000 and invested approximately CA$100,000 in renovations to the premises, including upgrades to the kitchen and entrance. A December 2021 lease assignment and extension gave the Tenant a unilateral right to renew for an additional five years, provided eight months’ written notice was given—meaning the deadline was December 31, 2024.
The Tenant failed to provide written notice by the deadline. On February 4, 2025, the respondent/landlord (the Landlord) informed the Tenant that the lease would end on August 31, 2025. Mr. Yahia responded immediately, stating he wished to renew and explaining that he had been ill. The Landlord refused, and by March 7, 2025, had executed a new lease with the neighboring business, which planned to expand into the subject unit. The Landlord also sent an email on February 5, 2025, falsely claiming a lease had already been signed with the neighboring business, Aladdin Bakery. An interlocutory injunction was granted on August 26, 2025, preserving the status quo until the application was heard.
At the hearing of the application, the Tenant sought relief from forfeiture, arguing that the equities were in its favour, as it had invested resources in the premises and expressed interest in extending the lease, Mr. Yahia was ill at the time of the expiration of the lease, and the Tenant believed – based on prior conduct – that it would receive a reminder of the renewal option.[2]
The Landlord argued that the Tenant had failed to establish that it had been diligent. The Landlord pointed to Mr. Yahia’s admission in cross-examination that he thought the lease would just be renewed and he did not think that he had to provide written notice, and to the fact that letters sent to the previous tenant were offers to rent, and not reminders to renew. The Landlord also argued that it and an innocent third party (the neighbouring business with which the Landlord had entered into a new lease) would suffer prejudice if the Tenant’s request was granted.[3]
The reasoning
Justice Doyle acknowledged that the grounds for obtaining equitable relief from forfeiture for a tenant who has missed a deadline were narrow, and required the Tenant to establish that it made diligent efforts to comply with the terms of the lease, which were unavailing through no default of their own.[4] The Court acknowledged that it should not lightly interfere with commercial transactions,[5] and that landlords are entitled to expect tenants’ compliance with the terms of a written lease.
However, the Court found that the equities favoured the Tenant, who showed due diligence in the circumstances. Justice Doyle pointed to several features of this case that warranted relief:
- The Applicant had the intention to renew, and had communicated this to the Landlord’s property manager earlier during the lease term. In particular, it was reasonable for the Tenant to think that expressing its intention of renewing the lease to the property manager, in-person, in addition to expending significant funds to improve the property was sufficient to communicate its intention to renew.
- While the Landlord was not obligated to remind the Tenant, the Tenant was under the impression it would receive a reminder based on past experience, as there had been “a pattern” of sending reminders on at least two occasions.
- Medical evidence showed that the Tenant’s representative, Mr. Yahia, was suffering from insomnia at the time he was required to provide written notice to renew the lease. The insomnia “impaired his ability to track and comply with the renewal deadlines.”
- As soon as he was told that he had missed the deadline, the Tenant moved swiftly to renew the lease.
- The Tenant was not a sophisticated business person.
- The Tenant had not previously defaulted under the lease.[6]
The Court found that these factual elements distinguished the matter from decisions cited by the Landlord where relief from forfeiture was denied.[7] Specifically, in those cases: (a) a tenant had failed to provide an explanation as to why they had failed to exercise the option to renew, and there was no evidence that the landlord led the tenant to believe strict compliance with the lease terms was not required;[8] (b) a tenant’s lawyer failed to deliver the notice to renew and the landlord had already entered into an agreement to sell the property;[9] (c) a tenant had previously defaulted under the subject lease;[10] (d) a tenant’s lawyer failed to renew in accordance with the lease, and the Court found the tenant’s remedy was against their lawyer;[11] (e) the relevant agreements between the parties led to genuine confusion on the part of both parties as to the applicable termination date and the time frame for notice of renewal;[12] and (f) a tenant had repeatedly failed to effectively pay rent on time, and there were other issues, including an allegation of insurance fraud.[13] By contrast, the present matter involved a technical breach and lacked wilful neglect, a finding based in part on the pattern of sending reminders.[14]
The Court emphasized that the Tenant came to court “with clean hands,” and determined that the circumstances cried out for equitable relief.[15]
As for the innocent third party, Aladdin Bakery,[16] the Court was blunt, noting that “the prospect of financial ruin on the applicant weighs in favour of relief as opposed to the speculative prejudice on Aladdin which is wishing to expand.”[17] Aladdin Bakery was aware of the proceeding (and a related injunction) but did not attend or make submissions – a fact that likely informed the court’s conclusion that allegations of prejudice were speculative.
The outcome
The Court declared the lease renewed for five years until August 31, 2030, restoring the Tenant’s contractual right of renewal despite the technical non-compliance with the notice provisions.
This decision is a stark reminder to landlords that the Court will not mechanically enforce the terms of lease agreements without regard to the surrounding context of the particular landlord/tenant relationship in question. Instead, the Court favours a nuanced analysis of the circumstances, including an assessment of the specific capacities of the tenant, the relationship between the parties and the interactions they’ve shared. While a landlord may have the letter of an agreement on their side, the Court will not shy away from exercising equitable jurisdiction when appropriate.
For more information, please reach out to the authors, Fraser Mackinnon Blair and Conor McCarthy.
[2] Ambassador Realty Inc., at paras. 27-28.
[3] Ambassador Realty Inc., at paras. 29-30.
[4] Ambassador Realty Inc., at para. 39.
[5] Ambassador Realty Inc., at para. 40, citing Bedard v. 1526924 Ontario Ltd., 2005 CanLII 21116 (Ont. S.C.), at para. 8.
[6] Ambassador Realty Inc., at paras. 50-73.
[7] Ambassador Realty Inc., at paras. 45-48, 61-65.
[8] Dobcor Investments Inc. v. Bargain Car and Truck, 2023 ONSC 2304.
[9] Bedard.
[10] WG Brampton Fitness Inc. and W.G.K. Fitness Inc. v. Sobeys Capital Incorporated, Woodmere Shopping Centre Inc., 2025 ONSC 3420.
[11] 120 Adelaide Leaseholds Inc. v. Oxford Properties Canada Ltd., [1993] O.J. No. 2801 (C.A.).
[12] Subway Franchise Restaurants v. BMO Life Assurance Co., 2020 ONSC 371.
[13] Kassiouris v. Kalantzis, 2017 ONSC 1985.
[14] Ambassador Realty Inc., at para. 49.
[15] Ambassador Realty Inc., at paras. 78-79.
[16] A local institution in its own right.
[17] Ambassador Realty Inc., at para. 42.
