Court File and Parties
Superior Court of Justice – Ontario
Between: 8750297 Canada Inc., Applicant
And: Ambassador Realty Inc., Respondent
Before: Justice A. Doyle
Counsel:
- Osman Aweis, for the Applicant
- Stephane MacLean, for the Respondent
Heard: September 23, 2025 at Ottawa
Decision on an Application
[1] Introduction
1The applicant brings an application for relief from forfeiture pursuant to s. 20(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 (CTA), and s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA). The applicant, which is owned by Mr. Ahmed Yahia and runs a pizza restaurant, did not provide written notice to renew the lease of the commercial space located at 1020 St. Laurent Blvd., Unit 6 (the premises), owned by the respondent, as required under the lease.
2The respondent proceeded to make arrangements for the neighbouring business, Aladdin Bakery, to take over the space on September 1, 2025. A lease was executed on March 7, 2025.
3On August 26, 2025, Justice Carter granted an interlocutory injunction restraining the respondent from taking any steps to terminate the lease, locking the applicant out of the premises, re-entering the premises or allowing the neighbour, Aladdin Bakery, to take over the premises until the determination of this application.
Background
4The original six-year lease was signed on August 4, 2006, with the previous owner of the pizza business, 1 for 1 Pizza, Mr. Musleh Tahir. The lease contained an option to renew upon nine months' notice.
5On November 25, 2011, prior to the expiration of the lease, the respondent sent a letter to Mr. Tahir indicating that the lease would expire on August 31, 2012, and that they were prepared to extend the lease for five years to August 31, 2017, with the proposed terms and rent payable. He was asked to sign the offer and return it.
6The lease was renewed again, with the option to renew the lease upon nine months' notice.
7On November 30, 2012, the applicant purchased the franchise 1 for 1 Pizza for the purchase price of $125,000 and a deposit of $65,000.
8On December 19, 2016, weeks prior to the expiration of the lease, the respondent sent a letter to Mr. Tahir with an offer to extend the lease along with the proposed terms.
9At the time, the applicant was the tenant of the premises, and it was the applicant's intention to remain in the premises. The lease was renewed.
10In his cross-examination, Arthur Loeb, the president of the respondent, characterized these letters as "courtesy reminders" rather than warnings, and stated that the purpose was to determine if the tenant was going to renew the lease.
11On December 15, 2021, a lease assignment and extension was executed and provided, among other things:
- The assignment of the lease from 1 for 1 Pizza to the applicant;
- It entitled the applicant to rename the business from 1 for 1 Pizza;
- It amended the lease to include the rent per square foot;
- It indicated that it would end on August 31, 2025; and
- It provided that the applicant had the unilateral right to exercise an option to renew for an additional term of five years, provided that he gave eight months' written notice.
12The applicant expended considerable funds in upgrading the premises in the amount of approximately $100,000, which included renovations to the kitchen and entrance area.
13He employs anywhere from 8 to 12 people, has a following in the east end, and has established customers after 12 years of operating his business.
14While these renovations were being made, there is evidence that the respondent's property manager, Marie Chenier, would frequent the premises and engage in discussions with Mr. Yahia, the owner of the applicant.
15Their discussions are not admitted, but according to the applicant, he told her that he was interested in staying and showed his commitment by the extensive funds he was expending to ready the premises. He stated that he told her he would like to renew the lease when it expired in three years, as he would not have undergone this amount of work for only a three-year lease, and it was his intention to be there for a long time. He states that she told him that it was too early to renew.
16As stated above, the lease expired on August 31, 2025, unless the applicant provided written notice to exercise its option on or before December 31, 2024.
17On February 4, 2025, the respondent wrote to the applicant indicating that, since they had not exercised their option, that the lease was coming to an end on August 31, 2025.
18The applicant wrote back immediately, indicating that he wished to exercise the option, that he had been ill, and he was waiting for the agreement to sign, and it could be sent by DocuSign.
19The respondent sent an email on the evening of February 5, 2025, stating that the lease was at an end and that the respondent had entered into a lease with someone else. This was, in fact, not true, as the lease with the applicant's neighbour, Aladdin, was not entered into until March 7, 2025.
20The applicant denies receiving this email and did not respond.
21Mr. Yahia followed up on June 5, 2025, with the respondent, inquiring about the renewal of the lease as per his February 5, 2025, email.
22On June 11, 2025, the respondent's counsel wrote to the applicant indicating that the lease was at an end and that vacant possession was required as of August 31, 2025. The respondent informed the applicant that the premises had been rented to his neighbour and that they would not be renewing the lease.
23The lawyers became involved, and this application was commenced in August 2025.
24The respondent confirmed that the applicant was free to take any leasehold improvements, provided that they repaired any damage to the premises.
25To mitigate his losses, the applicant rented premises for his pizza business at 288 Bank Street, and the lease required payment of a $15,000 deposit. It is a five year lease with an option to renew for two additional 5 year terms.
26The expense of moving his fixtures and setting up at the Bank Street location is high, and there is an estimate of $135,000.
Applicant's Position
27The applicant is seeking relief from forfeiture for his failure to provide the required written notice under the lease.
28The applicant submits that the equities are in his favour. He has expended considerable resources in the premises on the basis that he would be able to rent the premises for a substantial period of time. He has been there for 12 years and he had expressed an interest to continue on as a tenant to the property manager. Also, Mr. Yahia was very ill at the time of the expiration of the lease. Most importantly, he was under the belief that he would receive a reminder of the renewal option, as had been done in the past.
Respondent's Position
29The applicant has failed to establish that he is entitled to relief from forfeiture, as the evidence falls short of showing that he was diligent, as required by case law.
30In his cross-examination, the applicant testified that he thought he would just be renewed and did not appreciate that he had to provide written notice. The previous letters sent to the previous tenant were offers to rent and were not meant to be reminders. The respondent argues that there would be prejudice to both the respondent and an innocent third party if relief were granted.
Legal Framework
31An option to renew a commercial lease is treated as a contractual right. Courts usually require strict compliance with the terms (e.g., giving notice within the required time frame).
32Missing the deadline usually means that the option is lost.
33Equitable relief from forfeiture can sometimes save a tenant who has missed the deadline.
34The courts can consider whether the breach was inadvertent, the tenant acted promptly once aware, and whether the landlord is not unfairly prejudiced, for example, if the landlord has already leased the premises to someone else in reliance on the tenant's failure.
35In 2324702 Ontario Inc. v. 1305 Dundas W Inc., 2020 ONCA 353 (Dundas) the Court of Appeal upheld the lower court's ruling to deny relief from forfeiture. The renewal option in the lease amending agreement required the appellant to give "no less than nine (9) months' and no more than eleven (11) months' written notice to the Landlord prior to the expiry of the then-current term" in order to renew the lease.
36When the appellant failed to pay the February 2018 rent, the respondent terminated the lease. The appellant then commenced an application on February 21, 2018, for a declaration that the lease had not been validly terminated, or for relief from forfeiture. The respondent brought a cross-application on July 12, 2018, for a declaration that the lease was terminated. Counsel reached an interim without prejudice agreement that the appellant could remain in the premises pending the outcome of the litigation on payment of rent. Then, on September 11, 2018, the application judge granted the appellant an adjournment on terms that included the ongoing payment of rent. The application was heard on February 20, 2019. In the interim, two rent cheques were paid late, one of which was returned for non-sufficient funds (NSF).
37The court agreed with the application judge that the respondent did not waive the right to require strict compliance with the written notice provision of the renewal option. However, the appellant expected the respondent to agree on a rental figure before it committed itself to the renewal.
38The Court of Appeal summarized the law as follows:
[22] The Commercial Tenancies Act, R.S.O. 1990, c. L.7, allows the court to grant "such relief as […] the court thinks fit", having regard to all the circumstances, where a landlord seeks to enforce a right of re-entry or forfeiture following a tenant's breach: ss. 19, 20(1). The Saskatchewan River Bungalows case also established the test for granting relief from forfeiture. In granting the discretionary and equitable remedy of a relief from forfeiture, a court is to consider the conduct of the applicant, the gravity of the applicant's breaches of the lease, and the disparity between the value of the forfeited property and the damage caused by the breach: Saskatchewan River Bungalows, at p. 504.
[23] Although the failure to renew the lease is not a breach of the lease, the court may grant relief from forfeiture where a party seeks to renew the lease but has not complied with the formal requirements or preconditions for doing so. However, this relief is available only in circumstances more narrowly confined than the three-pronged test from Saskatchewan River Bungalows. As recently restated in McRae Cold Storage Inc. v. Nova Cold Logistics ULC, 2019 ONCA 452, at para. 10:
With respect to the renewal of a lease, a precondition for the exercise of any such equitable discretion is that the tenant has made diligent efforts to comply with the terms of the lease which are unavailing through no default of his or her own: 120 Adelaide Leaseholds Inc., at para. 9; Ross v. T. Eaton Co. (1992), 11 O.R. (3d) 115 (C.A.), at pp. 124-125; 1383421 Ontario Inc. v. Ole Miss Place Inc. (2003), 67 O.R. (3d) 161 (C.A.), at para. 80; Mapleview-Veterans Drive Investments Inc. v. Papa Kerollus VI Inc., 2016 ONCA 93, 344 O.A.C. 363, at paras. 55-56.
[24] The application judge found that equitable relief was not warranted here because of the appellant's conduct. First, the appellant had not made diligent efforts to comply with the renewal term, but instead hedged its bets by seeking to negotiate without committing to renew. Second, the appellant's failure to pay its rent on time, including one time when it delivered an NSF cheque, was not the type of reasonable conduct that a court looks for as the basis to grant equitable relief. Although the appellant has a large investment in the premises which it stands to lose, this consequence is effectively a result of its own decisions regarding its conduct in relation to the respondent.
[25] The appellant argues that in assessing its conduct, the application judge misapprehended the evidence by stating that the appellant had experience in exercising a renewal option for the premises. In fact, the appellant says, it had not previously exercised a renewal option but rather, entered into a lease amending agreement. We reject this argument. The application judge's point was that the appellant had a level of sophistication in dealing with the lease of the premises, which was partly based on its prior dealings with the respondent's predecessor in negotiating and concluding the lease amending agreement. That experience spoke against any misunderstanding of the renewal requirements.
Analysis
Introduction
39A precondition for the exercise of equitable discretion is that the tenant has made diligent efforts to comply with the terms of the lease, which were unavailing through no default of their own. It is a very narrow test.
40The court should not lightly interfere in a commercial transaction freely entered into by the parties. As stated in Bedard v. 1526924 Ontario Ltd., at para. 8:
"Commercial certainty dictates, that the terms of the contract should be strictly complied with by the parties to the agreement unless there is some evidence of bad faith, misrepresentation or other reason not to hold the parties to the bargain they made."
41I note that a denial of the relief sought would not unjustly enrich the landlord (landlord benefits from improvements without compensating tenant), as in this case, the respondent offered the applicant to pick up his fixtures from the premises, provided that he repaired any damage caused by their removal. Owners of commercial premises are entitled to expect compliance with leases in order that they can plan for rentals and manage their properties.
42However, in the circumstances of this case, the equities favour the applicant.
43For the reasons set out below, the court will grant relief from forfeiture. The court issues a declaration that the lease between the parties remains valid until August 31, 2030, because the court finds that the applicant showed due diligence in that:
- The applicant acted in good faith and verbalized an intention to renew to the property manager;
- His failure to comply was due to illness and inadvertence, rather than deliberate disregard;
- He assumed he would receive a reminder from the respondent as had been the past practice; and
- As soon as he was told about the missed deadline, he immediately advised the respondent he wished to renew the lease.
44Regarding the innocent party, Aladdin, I refer to McLean v. 1833216 Ontario Ltd., 2013 ONSC 1228, where the court stated:
[15] Intervening third-party interests may be such a factor. In this particular case the potential purchaser of the property appeared and submitted that if the landlord could not provide vacant possession, then the agreement of purchase and sale would be null and void to the detriment of both the seller and the purchaser. I do not consider that the purchaser in this case has such an intervening interest that the operation of Equity should be deflected. The purchaser has always had actual notice of the existence of the lease and, originally, had specifically agreed to purchase the property subject to this lease. This is not a case where a purchaser submitted an offer to purchase subsequent to the landlord's re-entry and in ignorance of the tenant's application for relief from forfeiture.
[42] On this record, I find that the third party is aware that the parties are in court dealing with the issue of the lease. I find 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. There is no evidence that Aladdin will not be able to operate its ongoing business.
Discussion
45I will turn to some of the cases cited and distinguish them from the case at bar. Here, the applicant was a good and law-abiding tenant who was committed to his restaurant and business and, through inadvertence, missed the deadline for exercising his option.
46In Dobcor Investments Inc. v. Bargain Car and Truck, 2023 ONSC 2304, the court found that the tenant did not provide any explanation for why they did not exercise the option to renew within the period. The term was clear and unambiguous, and there was no evidence that the landlord led the tenant to believe that it did not need to comply with strict terms of the lease.
47In Bedard v. 1526924 Ontario Ltd., the court denied relief from forfeiture, as it found that the tenant's solicitor had failed to deliver the notice and the owner/landlord had already entered into an agreement of purchase and sale to sell the property.
48In 1357277 Ontario Inc. v. Grekos, is distinguishable as the issue was whether the offer was open for acceptance.
49In this case, the failure to provide a full nine months' notice was a technical breach and not the result of wilful neglect on the part of the applicant.
50First, I find that the applicant had the intention to renew. The court finds that the applicant, from the moment he took over the franchise, had the intention to invest his life's savings into the pizza business and spent considerable time and effort building his business. The court finds that it was his intention to continue running the business beyond the three years of the original lease.
51Unlike the Dundas case above, I do not find that the applicant's conduct was unreasonable or that he "was hedging his bets." The application judge's finding, which was upheld by the Court of Appeal, was that he was "not unsophisticated regarding knowledge of his rights." Also, he had missed rent three times, "including in the face of a court order," which "went to the heart of the relationship."
52Here, in 2022, the applicant states that he was misled by the property manager's assurance that it was too early to renew the lease, when he was in the midst of extensive renovations at the premises. He told her of his intention to remain there. The property manager denies this conversation but I find it more likely than not that the applicant who was spending his life savings on preparing the business would have discussions with her regarding this future investment.
53Second, he was under the impression that he would receive a reminder. There had been at least one occasion, in December 2016, when he was renting the premises. He was the tenant, even though the notice was sent to Mr. Tahir, who was named on the lease. The lease was extended, as the applicant wished to continue renting the premises.
54Third, medical evidence confirms that in the fall 2024, at the time that he was required to provide written notice, he was suffering from clinically diagnosed insomnia which impaired his ability to track and comply with the renewal deadlines.
55A letter from the Evans Medical Center dated August 14, 2025, shows appointments from December 17, 2024 to March 18, 2025, and confirm a diagnosis of primary insomnia for which he was prescribed Temazepam on December 31, 2024. The side effects include grogginess, reduced alertness and slowed reaction times. The insomnia was severe and debilitating with symptoms including inability to sleep, chronic headaches, heightened anxiety and irritability, extreme daytime fatigue affecting Mr. Yahia's ability to perform work duties or daily activities safely and persistent dizziness and light headedness. In conclusion, Dr. Emad Abdulkarim opines that "these symptoms significantly impair the patient's daily functioning and overall quality of life".
56In his cross-examinations, Mr. Yahia described his disease as experiencing "hypnic jerks", that is, involuntarily muscle jerks or spasms when he tried to go to sleep, making his body jump out of bed.
57Next, the applicant moved swiftly once he was told he had missed the deadline. In fact, on February 5, 2025, when he was advised by the respondent of the missed deadline, he wrote to him the same day indicating his intention to renew, and asked them to send him a reminder in the future and to provide the lease for his signature.
58The respondent argues that he did not show due diligence, as he admitted on cross-examination that he did not know he had to give a written notice.
59He did admit that he was aware that he had to exercise the option within a certain deadline but unaware it had to be in writing. He had reviewed it once and admitted that this was his first time signing a commercial lease. In my view, unlike the Dundas case, Mr. Yahia was not a sophisticated businessperson with past experience in commercial real estate.
60He admitted that due to his lack of experience, and only having read the lease once, he was not certain whether he had to exercise the option in writing.
61Next, there is no evidence of tenant defaults as found in some cases.
62In WG Brampton Fitness Inc. and W.G.K. Fitness Inc. v. Sobeys Capital Incorporated, Woodmere Shopping Centre Inc., 2025 ONSC 3420, the court refused to grant relief from forfeiture, as the sublease explicitly stated that the tenant would forfeit that right upon habitual defaults. The tenant had committed more than two defaults during the lease, including non-payment of rent during the pandemic.
63In 120 Adelaide Leaseholds Inc. v. Oxford Properties Canada Ltd., [1993] O.J. No. 2801, the Court of Appeal refused to grant relief from forfeiture. That case dealt with a requirement that the intention to renew had to be exercised 18 months before the expiration of the lease. The tenant argued that a number of documents had been provided, including a sublease and a mortgage, which contemplated the renewal of the lease, as well as letters to third parties and internal memoranda, all of which were provided to the landlord. Ultimately, the tenant provided notice of its intention to exercise the option to renew 15 months prior to the lease's expiration. The court referred to an earlier decision of the Ontario Court of Appeal in Ross v. T. Eaton Co. (1992), 11 O.R. (3d) 115 at 124–25, which confirmed that the court has jurisdiction to grant equitable relief in cases where tenants have failed to exercise the option. However, the court found that it was the fault of the solicitors for not renewing in accordance with the lease, and that the tenant's remedy lay against their solicitors.
64In Subway Franchise Restaurants v. BMO Life Assurance Co., 2020 ONSC 371, the court declined to grant relief from forfeiture to a commercial tenant who missed the time frame to give notice to renew its lease. It found that the applicant should have known and complied with the date, and that it was not up to the respondent to keep track of the relevant dates. The case was upheld on appeal. In that case, the applicant had signed an estoppel certificate, which represented to the respondent when the term of the lease ended, and the lease put the obligation on the tenant to give notice—not the respondent. In this case, there was "genuine confusion" (para. 36) on the part of both parties as to the termination date and the time frame for the notice of renewal. Given the structure of the renewal option in the lease, the court held that the applicant was the responsible party and declined to grant relief.
65In Kassiouris v. Kalantzis, 2017 ONSC 1985, relief was denied. The tenant ran an auto body shop and was persistently late in making rental payments; cheques were returned NSF, and there were other issues relating to the ceiling and roof of the premises. A condition of the new lease was that rent be paid regularly and the covenants and provisions in the lease be met. It required notice in writing six months before the end of the lease term. The tenant was at times late with rent, and there were at least six NSF cheques during the second lease. There was also a dispute over $2,400 in rent owing, disputes about the payment of HST on the rent, and an allegation of insurance fraud. Unlike the case here, that tenant did not make a clear and unambiguous intention to exercise its option.
66Also, the applicant did make efforts to mitigate his losses and rented space on Bank Street, which was previously a pizza shop but has significant start-up costs which will be difficult to fund without revenue from the St. Laurent location.
67Finally, I find that as a first time commercial tenant, the applicant's expectations were reasonable.
68It was reasonable for him to express his intention of staying at the premises after the lease ended to the property manager, who was the person on site and, in his mind, represented the interests of the respondent.
69His mind was preoccupied with running the business, completing the renovations, and he faced challenges running the restaurant, which took many hours per day.
70The evidence is clear that the applicant spent a considerable amount of money completing serious renovations to make a profitable business and a going concern.
71He was under the impression that there would be ongoing renewals, as the franchisor had been there since 2006 and there were constant renewals. He did not fathom that the respondent, as his landlord, would ask him to leave as he was a good tenant and paid his rent. He actually said that the thought he would be there for 30 years, where he had put his life's savings into the business.
72Mr. Loeb, in his cross-examinations, said that it was not deliberate to not send a reminder and suggested that perhaps they no longer send reminders to long term tenants.
73To be clear, the respondent was not under an obligation to remind the applicant nor was its silence an indication of a waiver of the term of the lease. However, there was a pattern of at least on two occasions (once when the applicant was using the space) of sending reminders.
74The respondent also submits that the applicant showed a lack of due diligence in his failure to respond to Mr. Loeb's email at 8:28 p.m. on February 5, 2025 indicating that the lease was terminating as of August 31, 2025 and that it had rented to another individual. This was not true.
75In my view, this is not in the spirit of performing contractual terms in good faith; see Bhasin v. Hrynew, 2014 SCC 71. The Supreme Court has described the duty of good faith in terms of honesty in the parties' mutual dealings. At para 73, the court stated; that "parties must not lie or otherwise mislead each other… about one's contractual performance."
76The applicant denies seeing that email. He sent a follow up email in June 2025 inquiring about the new lease.
77Dealing with the prejudice to the respondent and Aladdin Bakery, the lease with Aladdin Bakery, with the owner Mohammed Farhat, was not signed until March 7, 2025, after the applicant had told the respondent he wished to renew the lease. There is evidence that they had discussions over the years that if the space became available, they would discuss it with Aladdin. Mr. Loeb did not believe he owed an explanation to the applicant for his refusal to renew as the applicant had missed his date for renewal.
78This is a case that cries out for the court to exercise its equitable powers and relieve the applicant who, in good faith, showed an intention to renew in conduct (extensive renovations), representations to their property manager, and renewed as soon as he was reminded of the deadline. This coupled with his illness, caused him to miss the deadline through no fault of his own.
79I find, in the circumstances that the applicant exercised due diligence, and his conduct was reasonable given the history of the previous reminders. He was not a tenant who was trying to "hedge his bets" or was behind in payment of his rent as in Dundas. He comes to court with clean hands.
80Section 20(1) of CLA provides relief from forfeiture "having regard to the proceeding and conduct of the parties under section 19 and to all other circumstances." As well, s. 98 of the CJA grants the court jurisdiction to grant relief from forfeiture as the court considers just.
81In conclusion, the court is exercising its equitable powers to grant relief from forfeiture due to the reasons for the default: the applicant's illness, inadvertence, and his misunderstanding that the respondent would provide a reminder. I find that this was a reasonable expectation.
82There is evidence of good faith and intention to renew, as evidenced by his extensive and costly investments into the business and the premises.
83Accordingly, the court issues a declaration that the lease is renewed despite the technical non-compliance with the notice provisions, and the applicant is thereby restored to his contractual right of renewal for the remainder of the term of five years and on the conditions set out in the lease.
84If parties cannot resolve the issues of costs, they may forward a 2 page costs submissions by October 10, 2025. There is no need to file bills of costs as they have already been filed.
Released: September 26, 2025
Justice A. Doyle