In our February 8, 2024, News ReLease, we reported on The Canada Life Assurance Company et al. v Aphria Inc. (“Aphria”). In that case, the tenant wanted out of its lease and purported to “repudiate”, in an attempt to force the landlord to take the (office) space to market. The landlord took the position that it had no obligation to accept the tenant’s repudiation or look for a replacement tenant, and that the tenant was required to pay rent over the balance of the term.

According to one of the most important Court rulings in the field of commercial property leasing (the Supreme Court of Canada’s 1971 decision in Highway Properties Ltd. v Kelly, Douglas and Co. Ltd. (“Highway Properties”)), a landlord has 4 options when its tenant fundamentally breaches a commercial lease. One of those options is to keep the lease alive (or “affirm” the lease) and sue for rent over the balance of the term on the basis that the lease remains in force. The Courts have consistently held that when a landlord elects this option, it has no obligation to mitigate.