Transactions & Cases Detail
The Superior Court of Justice dismisses claims for commercial-lease renewal and duty of good faith against York University Development Corporation
February 16, 2012
Real Property / Construction
720 Thousand CAD
On February 16, 2012, The Superior Court of Justice dismissed the claim by the plaintiffs, Polly Bindra and 1541625 Ontario Ltd. against the defendant landlord , York University Development Corporation (YUDC). The plaintiff is a restaurant located in the York Lanes complex at York University, with a 10-year lease expiring on August 31, 2011. The Plaintiff claimed that a lease should be renewed, based on a promise or representation by YUDC's Director of Finance and Administration in 2009. The Plaintiff sought a declaration of a ten-year leasehold or alternatively, damages. They also alleged that once YUDC decided internally in 2005 not to renew the lease, YUDC was obliged, under the duty of good faith, to notify the tenant of its decision not to renew despite no contractual obligation to do so.
Justice Pollak dismissed the action, finding that the alleged representation by YUDC to the Plaintiff for a lease renewal was not made. As such, the claims for a declaration for a 10-year lease was dismissed. In respect to the claims for a duty of good faith, the Court held that YUDC, as a commercial landlord, did not owe to its relatively sophisticated tenant a duty of good faith. There was no contractual duty to notify the Plaintiff of YUDC’s decision not to renew and the duty of good faith can not be used to create new rights (but can only be used to mandate how an existing right ought to be performed). Importantly, the Court recognized that a landlord is entitled to treat tenants differently as long as the landlord complies with its individual contractual obligations to each tenant. The defendant was awarded over C$63,000 in costs.
McCarthy Tétrault LLP represented YUDC, with a team led by Eli Mogil.