Legal Blog

Reliance Damages on Lease

2505243 Ontario Limited v. Princes Gates Hotel LP 2022 Ont C.A.

Landlord was not happy with tenant and looking elsewhere. Pandemic hit and landlord shut down its hotel and tenant’s restaurants. Landlord refused to use CECRA to assist tenant in paying rent. Landlord made a deal with new tenant and then terminated the lease for non-payment of rent. Court agreed with trial judge that landlord caused the tenant’s financial difficulty and could not rely on non-payment of rent and that landlord had acted in bad faith, pretending that the lease was continuing and, at the same time, knowing it was negotiating elsewhere and would terminate the lease as soon as it had an alternative tenant. Because, had the lease remained extant, it was unlikely that the tenant would ever have made a profit, the court allowed reliance damages (i.e. wasted expenditures) rather than expectation damages.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.