The tenant of a commercial building operated a bar and sought to exercise an option to renew its lease.
The landlord refused to renew, alleging the tenant was in default due to continuous over-serving of alcohol, which resulted in intoxicated patrons causing disturbances, vomiting, and urinating around the building.
The application judge granted the tenant's application for a declaration that it had validly renewed the lease.
The Court of Appeal allowed the landlord's appeal, finding that the tenant was in subsisting breach of the lease covenants at the operative date for renewal.
The Court held that the landlord was not required to give notice of default to refuse renewal, and that the landlord's acceptance of rent waives forfeiture of the existing term but does not bar it from refusing the renewal.