SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2268188 ONTARIO LIMITED O/A SERENITY DECKS, Applicant
AND:
1540256 ONTARIO LIMITED, Respondent
AND RE:
1540256 ONTARIO LIMITED, Applicant
AND:
2268188 ONTARIO LIMITED O/A SERENITY DECKS, Respondent
BEFORE: Schabas J.
COUNSEL: Meryl Morant, for 2268188 Ontario Limited
Dina Peat, for 1540256 Ontario Limited
HEARD: March 31, 2026
Reasons for judgment
Overview
1This is a commercial tenancy dispute arising from a 10-year lease commencing in June 2018. As a result of disputes that began in the fall of 2024, the Landlord, 1540256 Ontario Limited, locked out the Tenant, 2268188 Ontario Limited o/a Serenity Decks, and purported to terminate the lease due to unpaid rent in July 2025. After five days and following the Tenant’s commencement of an Application to this Court, the Landlord permitted the Tenant to return to the premises. The Tenant has paid all arrears of rent and continues to occupy the premises and has been paying rent on time since resuming occupancy.
2The Tenant’s application originally sought injunctive relief and relief from forfeiture, as well as a claim for damages. The matter came before Centa J. on August 11, 2025. By agreement, the Tenant was able to resume occupancy, removing the need for an injunction. Centa J. set a schedule for the application as well as an application that was to be issued by the Landlord.
3The Tenant’s application now only seeks a declaration that the lockout was unlawful and damages resulting from it. The Landlord’s application seeks a declaration that it is entitled to terminate the lease, asserting the Tenant’s failure to maintain the premises and breach of the use clause in the lease.
4The applications were heard together. For the reasons that follow, I grant the Tenant’s application for damages and dismiss the Landlord’s application.
The Tenant’s application
5Although the Tenant is back in possession of the leased premises, its application is based on the right to relief from forfeiture set out in s. 20(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 (“CTA”). The provision provides broad discretion to the court to order relief. As the Supreme Court wrote in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 100 (SCC), [1994] 2 S.C.R. 490 at p. 504, “[t]he power to grant relief against forfeiture is an equitable remedy and is purely discretionary. The factors to be considered by the Court in the exercise of its discretion are the conduct of the applicant, the gravity of the breaches, and the disparity between the value of the property forfeited and the damage caused by the breach.”
6Subsection 20(1) of the CTA enshrines this equitable remedy in statute and makes explicit the remedies available under it. The subsection dictates that a tenant may apply for relief and that “the court may grant such relief as, having regard to the proceeding and conduct of the parties under s. 19 and to all the other circumstances, the court thinks fit, and on such terms as to payment of rent, costs, expenses, damages, compensation, penalty, or otherwise”. This statutory grant of jurisdiction is broad and allows the court to fashion a remedy that is appropriate in the circumstances.
7It has also been recognized that forfeiture “is a very serious remedy that the court seeks to avoid if appropriate”: Michele’s Italian Ristorante Inc. v. 1272259 Ontario Ltd., 2016 ONSC 4888 at para. 32. As Perell J. went on to observe at para. 35, “[w]hat should not be lost sight of is that a landlord undoubtedly is always going to be able to point to misconduct by the tenant, else there would be no grounds for forfeiture in the first place, but the ultimate question is whether the court should exercise its equitable jurisdiction to relieve against the forfeiture imposed by the common law because it is an excessive remedy in all the circumstances.”
8Further, in considering the validity of a claim for forfeiture, or relief from forfeiture, the court “does not concern itself with the parties’ conduct generally, but only the conduct that relates directly to the very transaction concerning which the complaint is made”: Martineau Holdings v. Caudle et al., 2023 ONSC 358, at para. 44, citing 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885, 100 R.P.R. (5th) 223, at para. 20.
9When the Landlord locked out the Tenant, the Tenant owed the Landlord about $15,000, which was just over one month’s rent. These arrears came about because, starting in October 2024, the Landlord refused to accept rent following notice to the Tenant that it was required to undertake a range of repairs to the premises under the lease. As reflected in correspondence between counsel at the time, the Landlord was concerned that accepting rent could create the impression it was waiving its rights with respect to what it saw as the Tenant’s breaches of the lease. The Tenant took issue with this and it appears that it provided rental payments to its lawyers to hold in trust for the Landlord.
10Between November 2024 and February 2025, the parties engaged in communications regarding the demands by the Landlord for maintenance and repair work to be conducted by the Tenant. However, in March 2025, following allegations of bad faith by the Tenants, the Landlord’s position changed and it began accepting rental payments. Shortly after, the parties began discussing payments for the months in which the Landlord had refused to accept rent.
11Rent payments for January to April 2025 were made by the Tenant, and the Tenant provided post-dated cheques for subsequent months. However, as of mid-June the Tenant had not provided the rent for October, November and December 2024. On June 11, 2025, the Landlord made a further demand, failing which it warned a notice of default might be issued.
12On July 17, 2025, the Landlord delivered a Notice of Default demanding payment within five days of the amount outstanding for the three months, $37,417.23. On July 28, 2025, counsel for the Tenant transferred $22,255.43 to the Landlord. The Tenant then advised the Landlord that it was no longer represented by counsel. The Landlord then wrote on July 29, 2025 that the Tenant was in default as rent was still in arrears in the amount of $15,161.80.
13In an email on the evening of July 29, 2025, the owner of the Tenant asked counsel for the Landlord to contact his office the following day “to make arrangements to pick up [any] monies owing”. However, the Landlord did not wait, instead taking possession of the premises and locking out the Tenant that evening.
14The Landlord, technically, acted in accordance with the terms of the lease in locking out the Tenant as the Tenant was in arrears. However, in my view the Landlord acted in bad faith in locking out the Tenant and therefore, under s. 20(1) of the CTA, the Tenant is entitled to damages for loss of business and would be entitled to relief from forfeiture had the Landlord not permitted the Tenant to return. The reasons I grant damages and would grant relief from forfeiture overlap and are outlined below.
15First, the arrears in rent originated because of the Landlord’s refusal to accept rent for several months. Just as prior indulgences can weigh against a Landlord taking precipitous action, the Landlord’s conduct in creating the problem of arrears is also relevant: Up In Frames v. NYX Yonge Inc., 2022 ONSC 4795 at para. 24; 99 Cent Depot Hamilton Inc. v. Ravensgate Properties Inc., 2009 13624 (Ont. S.C.) at para. 33. To cause the arrears through refusing to accept rent and then use those same arrears as cause to terminate the lease undermines the Tenant’s legitimate contractual interests. This is contrary to the organizing principle of good faith outlined in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 65.
16Second, the conduct of the applicant, in this case the Tenant, was not so serious that it justified a lockout or termination of the lease. By July 2025, the lease had been in effect for over seven years. Although the Landlord complains that there were issues with rent payments several years earlier, that was during the COVID-19 pandemic and is far removed from the present situation. The Landlord complains that the Tenant gave inconsistent answers as to why the payments of rent were delayed in July 2025. That may well be, but actions speak louder than words. As of the end of July 2025, the Tenant had paid all rent owing for 2025. The day before the lockout, the Tenant’s lawyer transferred over $22,000 to the Landlord, leaving only about $15,000 outstanding, or a little more than one month’s rent. Further, the Tenant’s principal invited the Landlord to contact him to receive the amount owing the following day. In these circumstances, the conduct of the applicant favours relief from forfeiture.
17Third, the gravity of the breach is small. Being in arrears of just over one month’s rent, after recently providing several months’ rent that the Landlord had previously refused to take, is hardly a significant breach, especially after seven years of tenancy on a ten-year lease. This too favours relief from forfeiture. I also question the timing of the lockout, after the Tenant’s principal indicated the outstanding arrears would be paid the next day (which would remove the Landlord’s ability to lock out the Tenant).
18Fourth, the disparity between the harm caused to the Tenant, which operates its entire business from the leased premises, compared to the damage to the Landlord, also favours relief from forfeiture.
19The Tenant requests damages of $5,777.88 for the loss of business it incurred from being locked out of the premises for five days. Given that I have found the Landlord acted in bad faith in locking out the Tenant, I award these damages to the Tenant under s. 20(1) of the CTA.
The Landlord’s application
20The Landlord’s main argument to terminate the lease is based on the Tenant’s alleged failure to meet its obligations to maintain the building exterior, including landscaping, planting, and snow removal as required by s. 4.2 of the lease, and its failure to maintain and keep the premises in a good condition and order of repair as required by s. 5.1 of the lease. This includes any replacements and repairs, save and excepting structural repairs unless caused by the Tenant, including electrical, plumbing and climate control systems, machinery and equipment, entrances, glass, show window mouldings, store fronts, partitions, doors, and any other fixtures, equipment and appurtenances which are part of the premises. If the Tenant failed to make necessary repairs, the Landlord has the right to do so and charge the costs back to the Tenant plus a 15% administrative fee.
21In addition, the Landlord relies on the Use Clause, s. 6.1, which provides that the Tenant is to use the premises “only for the business of a distribution, sales and office of deck and deck related items”, and is not permitted to assign, transfer or permit occupancy of any third party with the prior written consent of the Landlord. However, this second issue was not pressed in argument and a breach of the use clause is not supported in the evidence.
22Issues regarding repairs arose in 2023. In September 2024 the Landlord obtained a building report that listed a number of items which, the Landlord says, were failures by the Tenant to make repairs and take other steps that, among other things, were potential breaches of the Fire Code, O. Reg. 213/07. The report was sent to the Tenant in October 2024 with a list of repair and maintenance items it was requiring of the Tenant.
23Discussions followed. The Landlord was unhappy with the efforts of the Tenant, which is why it began refusing to receive rent in October 2024. In January 2025, the Tenant’s counsel provided a detailed response to the list of items, disputing some, advising that work had been completed on some, and that other items would be dealt with after the winter. In February 2025 the Landlord attended the premises to assess the work and noted several issues were outstanding.
24In March, the Landlord began accepting rent again and there is little correspondence thereafter regarding maintenance and repairs. There was some delay in obtaining fire certificates, which were provided in June, but the Landlord’s focus was, by this time, on the issues of rent and insurance. As discussed above, when the Landlord locked out the Tenant and attempted to terminate the lease in July 2025, it was for non-payment of rent, not a failure to repair or maintain the premises.
25In 1328773 Ontario Inc. o/a Angling Outfitters v. 2047152 Ontario Limited, 2013 ONSC 4953, Leach J. reviewed the legal principles which apply to commercial tenancies and the right of a Landlord to terminate a lease. As she noted, at para. 14, “mere existence of a breach or default under a lease agreement is not synonymous with a right of re-entry or forfeiture. To the contrary, the law generally is protective of a tenant’s security of tenure, and a landlord must establish that the lease itself or extraordinary circumstances warrant dealing with a breach or default by way of lease termination and landlord re-entry rather than damages.”
26The breaches must be of “sufficient gravity” that they deny the Landlord of “substantially the whole” of the benefit of the lease: Angling Outfitters, at paras. 16-17. Further, quoting from para. 31 of ClubLink Corporation v. Pro-Hedge Funds Inc. (2009), 84 R.P.R. (4th) 274 (Ont. S.C), Leach J. observed at para. 17 of Angling Outfitters that it “has been noted in a number of cases that forfeiture of a lease is a serious event and that courts do not look favourably on forfeiture unless the tenant’s behavior has been persistent, substantial or reprehensible.”
27In my view, the Landlord has failed to establish that breaches of the lease, if any, are “persistent, substantial or reprehensible.” The Landlord has produced no correspondence after March 2025 relating to concerns about repairs or maintenance. There is no evidence that the Landlord regarded the deficiencies as so serious, substantial, or persistent that the Landlord undertook them itself. Even the Fire Code issues were not proven violations but items that the building report said should be reviewed, and apparently they were reviewed.
28Nor is there evidence of “reprehensible” failures to comply with the lease by the Tenant. Additionally, as of March 2025, the Landlord began accepting rent again, which is “an implicit assertion that the parties’ lease arrangement should continue”: Angling Outfitters, at para. 18.
29Accordingly, the Landlord’s application is dismissed.
30If the parties are unable to agree on costs, they may provide me with written submissions not exceeding 3 pages, double-spaced, not including attachments. The Tenant shall provide submissions with 21 days of the release of these Reasons and the Landlord’s submissions shall be provided 14 days after receipt of the Tenant’s submissions.
Schabas J.
Date: May 06, 2026