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biases and commercial contracts
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Anti-Black Racism and Relief from Commercial Forfeiture 

 

“While a single adjudication dealing with a discreet conflict between a commercial Landlord and Tenant cannot possibly address society’s many challenges with respect to racial justice, it equally cannot ignore them”1

In Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457, a Toronto landlord and property manager terminated a commercial lease and sought to evict the owners of a Caribbean restaurant from their shopping plaza. Although the jurisprudence is rife with these types of commercial tenancy disputes, this one is of particular note due to the fact that Justice Morgan remarked on the racist overtones of the landlord’s evidence and held that the societal realities pertaining to Black business people must be factored into the exercise of the court’s discretion in considering equitable remedies such as relief from commercial forfeiture.2

I. Setting the Table: Relief From Commercial Forfeiture3

When a commercial lease is terminated or not renewed by a landlord or property manager, a tenant may move before the court and seek to avail itself of the equitable remedy of relief from forfeiture.4 This remedy allows a court, by way of statutory authority or equitable jurisdiction, to reinstate or renew the tenancy, notwithstanding the valid termination of the lease.5

The remedy of relief from forfeiture is purely discretionary, is fact specific, and has been observed to be granted sparingly.6 In exercising its discretion as to whether to grant relief from forfeiture, a court must consider the following three criteria:

  1. the conduct of the applicant and the gravity of the breaches;
  2. whether the object of the right of forfeiture in the lease was essentially to secure the payment of money; and,
  3. the disparity or disproportion between the value of the property forfeited and the damages caused by the breach.7

Generally, in situations of non-payment of rent a court will grant relief from forfeiture if the tenant can make full payment of their arrears and continue payment of rent.8 However, and as observed by Justice Perell in Beaver Fuels Management Ltd. v. Baker’s Dozen Holdings Corp.,9 other circumstances can and should be examined including: the history of the relationship, the tenant’s good faith or bad faith or want of clean hands.10 In the case of Elias Restaurant, and as discussed below, the question of whether thinly veiled anti-black racism could be considered as an “other circumstance” was authoritatively answered.

II. The Decision

The tenant, Elias Restaurant, operates a family-owned restaurant and bar in a shopping plaza and serves a range of “Africa/Black/Caribbean cultural foods”.11 The tenant had invested over $150,000 in leasehold improvements, and despite the economic fallout from the pandemic had never once missed payment of rent.12

The commercial lease allowed the tenant to renew the lease by providing written notice of its desire to renew by January 31, 2017.13 Unfortunately, the tenant failed to deliver written notice prior to that date. However, the tenant had unsuccessfully tried on a number of occasions, both before and after January 21, 2017, to get in touch with the landlord and property manager to discuss the renewal of the lease.14 As noted by Justice Morgan, it appeared that the tenant’s attempts to get in touch with the landlord “were studiously avoided”.15

Despite the fact that the tenant had made efforts to renew the lease and had maintained full rental payments including through the pandemic, the landlord ended up terminating the tenant’s lease. In response, the tenant moved to prevent the landlord from evicting it from the premises and sought relief from forfeiture.

The landlord filed affidavit evidence which revealed that the tenant was not to its liking because the tenant had failed to attract “like minded family-oriented customers”.16 Additionally, the landlord put forth an affidavit by a contractor which stated that “the customers visiting the restaurant seems to me to be quite unlike, in a negative way, the usual clientele visiting other tenants” and that the tenant “detracts from the appeal of the Plaza for families”.17 Further, the landlord stated that a prospective tenant who would run a medical office would prove to be more profitable for the landlord than the current tenant and would “benefit other Plaza tenants by attracting like-minded family customers and meet important needs of the neighbourhood.”18

Justice Morgan was quick to point out that the prospective tenant was only offering to pay $4,360.62 plus monthly additional rent whereas the current tenant was already paying $6,605.73 and had offered to pay a total of $7,500.00 per month on a new 5 year lease.19 With respect to the remainder of the landlord’s evidence, Justice Morgan observed that it reflected a “caricature of racially derogatory themes” which reflected a broader stereotypical mindset that seeks to condemn minorities.20 His Honour then used the opportunity to take judicial notice of the existence of anti-black racism in Canada society and stated:

Generally speaking, a trier of fact can take judicial notice of facts that are ‘so notorious or generally accepted as not to be the subject of debate among reasonable persons’ To this I would add the observation that, ‘The existence of anti-black racism in Canadian society is not the subject of debate among reasonable people.’21

Ultimately, his Honour held that the balance of convenience and equities of the case favoured the tenant and granted relief from forfeiture.22 In doing so, Justice Morgan observed that if such relief was not granted the tenant would not only lose a substantial investment in the premises, but the tenant and its customers would also “suffer the indignity of being excluded from the Premises based on what can be seen as a form of bias which Ontario law rejects”.23

III. Conclusion

By all accounts Elias Restaurant is an “ideal tenant” – they never missed a rental payment, had made substantial investments in leasehold improvements, and even offered to pay more rent. Unfortunately, this case serves as a reminder that even if one does everything right as a commercial tenant, those who harbour racial prejudices may determine whether one is an “ideal tenant” solely on the basis of racially derogatory views. Fortunately, this decision affirms that the equitable remedy of relief of forfeiture is broad enough to encapsulate such factors, including accounting for racial biases that may serve as the impetus for a commercial tenancy dispute.

Footnotes
  1.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 38 (Elias Restaurant).
     
  2.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 38.
     
  3.   For a more detailed discussion of relief from commercial forfeiture see: “Commercial Lease Enforcement and Rent Payments in the Age of COVID-19”.
     
  4.   Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98; 1497777 Ontario Inc. v. Leon’ Furniture Ltd.,  (2003) O.J. No. 3708 (C.A.) at paras. 56-69, leave to appeal to S.C.C. ref’d (2003) S.C.C.A. No. 506; 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885 at para. 13; Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., (1994) 2 S.C.R. 490 at para. 32; Shiloh Spinners Ltd. v. Harding (1973) A.C. 691 (U.K. H.L.) at pp. 723-724.
     
  5.   Commercial Tenancies Act, R.S.O. 1990, c. L.7 s. 20(1) Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98; 1497777 Ontario Inc. v. Leon’ Furniture Ltd.,  (2003) O.J. No. 3708 (C.A.) at paras. 56-69, leave to appeal to S.C.C. ref’d (2003) S.C.C.A. No. 506; 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885 at para. 13; Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., (1994)2 S.C.R. 490 at para. 32; Shiloh Spinners Ltd. v. Harding (1973) A.C. 691 (U.K. H.L.) at pp. 723-724.
     
  6.   Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., (1994) 2 S.C.R. 490 at para. 32; 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885 at para. 15.
     
  7.   Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., (1994) 2 S.C.R. 490 at para. 32; Jungle Lion Management v. London Life Insurance Company, 2019 ONSC 780 at para. 34.
     
  8.   For example see: Beaver Fuels Management Ltd. v. Baker’s Dozen Holdings Corp., (2006) O.J. No. 5743 (S.C.) at para. 44. 116531 Can. Inc. v. 569562 Ont. Inc., (1988) O.J. No. 261 (Div. Ct.) at paras. 5, 11; Rexdale Investment Ltd. v. Gibson., (1967) 1 O.R. 251 (C.A.) at para. 6;
     
  9.   Beaver Fuels Management Ltd. v. Baker’s Dozen Holdings Corp., (2006) O.J. No. 5743 (S.C.)
     
  10.   Beaver Fuels Management Ltd. v. Baker’s Dozen Holdings Corp., (2006) O.J. No. 5743 (S.C.) at para. 43.
     
  11.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 4.
     
  12.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 5.
     
  13.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 9.
     
  14.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 10.
     
  15.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 11.
     
  16.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 12.
     
  17.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 17.
     
  18.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 23.
     
  19.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at paras. 24-26.
     
  20.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at paras. 20, 32.
     
  21.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 33.
     
  22.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 41.
     
  23.   Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457 (S.C.) at para. 42.
     
Robert Alfieri

Robert Alfieri

The author of this blog is Robert Alfieri. Rob is an associate at Wagner Sidlofsky LLP and a member of the firm’s Estate and Commercial Litigation Groups. He has appeared before the Ontario Superior Court of Justice and the Federal Court of Appeal on various matters. Prior to joining the firm, Rob practised class action litigation with a leading Toronto class action firm.

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This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.
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