Lease Remedies Clauses Can Limit Prospective Rent Claims After Termination

More than 50 years after Highway Properties Ltd. v. Kelly, Douglas and Co. Ltd. established the modern framework for commercial landlord remedies, Canadian courts are revisiting how far those remedies extend in current leasing disputes.

This past March the Ontario Court of Appeal in Highbury Narrows Ltd. v. LAF Canada Company considered whether specific provisions of a lease limit a landlord’s ability to recover prospective rent after termination. In Highbury, the Ontario Court of Appeal determined that this commercial landlord’s right to claim future rent after terminating a lease was limited due to the specific provisions in its lease. The lease gave the landlord two distinct options following tenant default: terminate the lease or keep it in force and recover rent as it became due. The Court held that, on the specific wording, the claim for future rent ceased to be available once the landlord terminated.